Please answer all of the questions below and show as much work as possible.

What is the difference between Earnings per Share and P$/$E ratio? What do they measure? $(10$pts$)$

Here is some recent financial data for a number of companies. Net Income and # of shares outstanding

are in thousands.

For each of the above companies, compute a$)$ earnings per share and b$)$ the P$/$E ratio. Your answer

should be calculated in an Excel workbook and you should use Excel formulas to do your

calculations. I need to see all work, and the formulas will be "the work". Be sure to label the results

so I know which company is which. $(36$pts$,6$pts per company$)$

As you answer these questions keep in mind that stock value $($price$)$ can be thought of as a function

of profit, growth opportunities and risk. Your answers should identify which of those $3$ factors

seems prominent in the determination of the price of a stock. When I ask "how can you tell" I am

looking for you to identify a piece of data on which you have based your answer. All of these can be

answered in a few lines.

a$)$ Look at Louis Vuitton and Steven Madden. What is it that makes Louis Vuitton stock sell at over

$$820$ a share while SHOO sells for over $$43$ a share? Is it profit? Growth potential? Risk? How

can you tell? $(9$pts$)$

b$)$ Look at DXLG and LULU. Is it profit, growth potential or risk that is the main reason why a share

of DXLG stock costs about $$5$ while LULU stock is worth over $$500$ a share? How can you tell?

$(9$pts$)$

c$)$ Which stock would you avoid purchasing, why? $(5$pts$)$

d$)$ If you were given a choice of investing your money inte one of the companies above, who would

it be$?$ Why did you choose that company? Growth, Earnings, both? $(4$pts$)$

Review