Suppose a client asks you for a valuation analysis on the eight-stock US common stock portfolio given in the table below. The stocks are equally weighted in the portfolio. You are evaluating the portfolio using three price multiples. The trailing 12 months (TTM) price-to-earnings ratio (P/E) is current price divided by diluted EPS over the past four quarters.11 In particular, diluted EPS is for continuing operations and before extraordinary items and accounting changes. The TTM price-to-sales ratio (P/S) is current price divided by sales per share over the last four quarters. The price-to-book ratio (P/B) is the current price divided by book value per share as given in the most recent quarterly statement. The data in the table are as of 12 September 2003.

1 In particular, diluted EPS is for continuing operations and before extraordinary items and accounting changes.
Based only on the information in the above table, calculate the following for the portfolio:
A.
I. Arithmetic mean P/E.
II. Median P/E.
B.
I. Arithmetic mean P/S.
II. Median P/S.
C.
I. Arithmetic mean P/B.
II. Median P/B.
D. Based on your answers to Parts A, B, and C, characterize the appropriateness of using the following valuation measures:
I. Mean and median P/E.
II. Mean and median P/S.
III. Mean and median P/B.

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JPM Germany 5-7 Year GBI (%) MSCI Germany Index (%) Year 15.74 46.21 1993 1994 -3.40 -6.18 8.04 1995 18.30 22.87 8.35 1996 45.90 1997 6.65 1998 20.32 12.45 41.20 1999 -2.19 2000 -9.53 7.44 5.55 2001 -17.75 -43.06 2002 10.27