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PA11-5 Computing and Interpreting Return on Equity (ROE) and Price/Earnings (P/E) Ratios [LO 11-5 Two online magazine companies reported the following in their financial statements
PA11-5 Computing and Interpreting Return on Equity (ROE) and Price/Earnings (P/E) Ratios [LO 11-5 Two online magazine companies reported the following in their financial statements BusinessWorld 2014 Fun and Games 2015 2015 2014 Net income Total stockholders' equity Earnings per share Stock price when annual results reported $108,500 $108,304 $ 89,920 $171,873 572,186 497,814 432,151 452,049 3.68 58.95 2.90 53.65 2.89 50.29 1.80 31.80 Required 1-a. Compute the 2015 ROE for each company. (Round your answers to 1 decimal place.) ROE BusinessWorld Fun and Games 1-b. Which company appears to generate greater returns on stockholders' equity in 2015? O BusinessWorld O Fun and Games Both Companies appear to generate the same return on equity 2-a. Compute the 2015 P/E ratio for each company. (Round your answers to 1 decimal place.) P/E Ratio BusinessWorld Fun and Games times times 2-b. Which company do investors appear to value more? O BusinessWorld O Fun and Games Both Companies appear to generate the same return on equity
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