Required > a. Comment on changes in net income and book values of each year. b. Compute the price-earnings (P/E) ratios and price-to-book (P/B) ratios for each year. c. Compute an average of price-earnings (P/E) ratios and price-to-book (P/B) ratios for each year. d. Comment on the companies' P/E ratios over time. Are there any unusually high or low P/E ratios? If so, why? Comment on the average over time. e. Why would the P/B ratios in the automotive industry generally be higher than 1? Are there any unusu- ally high or low P/B ratios? If so, why? Comment on the companies P/B ratios over time. Comment on the average over time. f. Compare the average P/E and P/B ratios for the pharmaceutical companies from Example 15.23 in the text with those in the auto industry.Fiscal Year Measure Company (U.S. dollars in millions) 2014 2015 2016 Ford Motor Company - U.S. Net income $ 1,231 $ 7,373 $ 4,596 Book value of common 24,438 28,642 29,170 stockholders' equity Market value of common stock 58,556 54.920 47,342 General Motors Company - U.S. Net income 3,949 9.687 9,427 Book value of common I 35,457 39,871 43,836 stockholders' equity Market value of common stock 56,090 52,926 53,199 Honda Motor Company - Japan Net income 6,074 4,241 3,059 Book value of common 61,600 59,184 60,032 stockholders equity Market value of common stock 64,003 58,863 49.632 Daimler AG - Germany Net income 8,940 9,157 8,975 Book value of common 53,250 58,218 61,000 stockholders equity Market value of common stock 89,984 90,215 79,641Financial Statement Analysis Case With declining demand and sales, the last several years have been challenging in the global auto industry. You are interested in better understanding the performance and valuation of major global companies in the industry. The following table presents net income for the year and shareholders' equity and market value at the end of each fiscal year for four global auto companies. I Fiscal YearEXHIBIT 15.10 Summary of Valuation Ratios Ratio Desirable Characteristics Pitfalls Price to Earnings (P/E) Ratio _ Market Value of Common Stock Higher P/E ratio indicates higher When net income is unusually Net Income expected profitability. high or low, the P/E ratio is not as useful. Market Value of Common Stock Higher P/B ratio indicates higher P/B ratios are often higher when Price to Book (P/B) Ratio = Book Value of Common expected profitability and growth. a company has unrecorded Stockholders Equity intangibles