Question
On August? 1, 2007 the Dell Computer? Corporation's stock closed trading at $ 27.76$27.76 per share while Apple? Corporation's shares closed at $ 133.64$133.64. Does
On August? 1, 2007 the Dell Computer? Corporation's stock closed trading at $ 27.76$27.76 per share while Apple? Corporation's shares closed at $ 133.64$133.64. Does this mean that because? Apple's stock price is roughly four times that of? Dell's, Apple is the more valuable? company? Interpret the prices for these two firms using the information found? here:
(Most recent 12 months) | Dell 2007 | Apple 2007 |
Net Income ($ millions) | $3,572 | $3,130 |
Shares outstanding (millions) | 2300 | 869.16 |
Earnings per share ($) | $1.55 | $3.60 |
Price per share (8/1/07) | $27.76 | $133.64 |
Price-to-earnings ratio (PE ratio) | 17.91 | 37.11 |
Book value of common equity ($ millions) | $4,129 | $9,984 |
Book value per share ($) | $1.80 | $11.49 |
Market-to-book ratio | 15.42 | 11.63 |
It appears that Apple enjoys a (lower or higher) price per share when compared to its 2007 earnings but a (lower or higher) price when compared to the book value of the? firm's equity. The (higher or lower) ?market-to-book ratio for Apple reflects that fact that Apple has used a great deal (less or more) equity? and (more or less) ?debt to finance its operations. Select the correct answer in parentheses.
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