Merck & Company is one of the world’s largest pharmaceutical companies. The following data were taken from the company’s 2004 annual report.

Required:

a. Compute Merck’s price-earnings ratio for March 1, 2005, and March 1, 2004.

b. Did the financial markets appear to be more optimistic about Merck’s future performance on March 1, 2004, or March 1, 2005?

c. Based on the information provided, estimate approximately how many shares of stock Merck had outstanding as of December 31, 2004.

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Net earnings (in millions) Earnings per share December 31, 2003 Fiscal Years Ending December 31, 2004 $5,813.4 $2.62 The following data were taken from public stock-price quotes. Stock price per share on March 1, 2005: $32.13 (Two months after the end of Merck's 2004 fiscal year.) Stock price per share on March 1, 2004: $48.45 (Two months after the end of Merck's 2003 fiscal year.) $6,830.9 $2.95