In early 2015, Abercrombie & Fitch (ANF) had a book equity of

$ 1 comma 396$1,396

million, a price per share of

$ 24.77$24.77,

and

69.6869.68

million shares outstanding. At the sametime, The Gap (GPS) had a book equity of

$ 2 comma 990$2,990

million, a share price of

$ 41.38$41.38,

and

424.67424.67

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

nothing.

(Round to two decimal places.)GPS's market-to-book ratio is

nothing.

(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 more favorably than The Gap. For every dollar of equity invested in ANF the market values that dollar today at

$ 1.24$1.24

vs.

$ 5.88$5.88

for a dollar invested in the GPS. Equity investors are willing to pay relatively more today for shares of ANF than for GPS because they expect ANF to produce superior performance in the future.Is the above statement true or false?

False

False

True

. (Select from the drop-down menu.)