Two magazine companies reported the following in their 2014 financial statements (in thousands of dollars, except earnings per share amounts and share prices)

Required:
1. Compute the 2014 ROE for each company (express ROE as a percentage rounded to one decimal place). Which company appears to generate greater returns on shareholders' equity in 2014?
2. Compute the 2014 P/E ratio for each company. Do investors appear to value one company more than the other? Explain.
3. Fun and Games reacquired 32,804 (thousand) common shares in 2014 at $4 per share. Recalculate the company's ROE for 2014, assuming that this share repurchase did not occur. Does this new ROE change your interpretation of the ROE ratios calculated in requirement 1?

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Business Now 2013 2014 Fun and Games 2014 2013 $ 91,420 $1/2,173 $ 54,502 Net income Total shareholders' equity Eornings per share Shore price when annual results reported $ 55,000 587, 186 3.20 54.40 512,814 3.19 51.04 894,302 2.10 32.55 934,098 59.70