In early $2022,$ Abercrombie & Fitch $($ANF$)$ had a book equity of $$820$ million, a price per share of $$39\mathrm{.}37,$ and $51\mathrm{.}3$ million shares outstanding. At the same time, The Gap $($GPS$)$ had a book equity of

$2,728$ million, a share price of $17\mathrm{.}43,$ and $367$ million shares outstanding.

a$.$ What is the market$-$to$-$book ratio of each of these clothing retailers?

b$.$ What conclusions do you draw from comparing the two ratios?

a$.$ What is the market$-$to$-$book ratio of each of these clothing retailers?

ANF's market$-$to$-$book ratio is

$($Round to two decimal places.$)$

GPS$\text{'}$s market$-$to$-$book ratio is

$($Round to two decimal places.$)$

b$.$ What conclusions do you draw from comparing the two ratios?

In a relative sense, the outlook of Abercrombie & Fitch

favorably than The Gap. For every dollar of equity invested in ANF the market values that dollar today at $$2\mathrm{.}46vs.$$$2\mathrm{.}34$ for a dollar

invested in the GPS$.$ Equity investors are willing to pay relatively

today for shares of ANF than for GPS because they expect

to produce superior performance in the future. $($Select

from the drop$-$down menus.$)$