Two companies in the transportation industry had the following information:

Required

a. Calculate the P/E ratios for both companies and comment on which is more affordable from that perspective. 

b. Calculate the dividend payout ratio and dividend yield for both companies and comment on the results. 

c. Determine the net free cash flows of both companies. Comment on what these amounts represent. 

d. What picture do you have of each company based on the financial information provided and the ratios you have calculated?

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Basic earnings per share Market price per share Dividends per share Cash flows from operating activities ($ thousands) Net capital expenditures ($ thousands) Company 1 $ 0.87 $ 11.82 $ 0.475 $64,621 $ 6,155 Company 2 $ 0.67 $ 25.26 $ 0.535 $235,786 $75,042