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Buy Now and Gerald's EZ Furniture are two publicly traded rental companies. They reported the following in their financial statements (in millions of dollars, except
Buy Now and Gerald's EZ Furniture are two publicly traded rental companies. They reported the following in their financial statements (in millions of dollars, except per-share amounts and stock prices) Gerald's EZ Furniture Buy Now 2015 124 176 1,142 2.31 2016 2015 $ 131 185 1,257 3.11 2016 Net income Total stockholders' equity Earnings per share Stock price when annual results reported 1,135 1.62 1,345 2.37 29.82 29.97 32.72 35.73 Required: 1-a. Compute the 2016 ROE for each company. Express ROE as a percentage. TIP: Remember that the bottom of the ROE ratio uses the average stockholders' equity 1-b. Which company appears to generate greater returns on stockholders' equity in 2016? 2-a. Compute the 2016 P/E ratio for each company 2-b. Which company do investors appear to value more
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