Required: 1-a. Compute the 2021 ROE for each company. 1-b. Which company appears to generate greater returns on stockholders' equity in 2021? 2-a. Compute the 2021 P/E ratio for each company. 2-b. Which company do investors appear to value more?

Required: 1-a. Compute the 2021 ROE for each company. 1-b. Which company appears to generate greater returns on stockholders' equity in 2021? 2-a. Compute the 2021 P/E ratio for each company. 2-b. Which company do investors appear to value more?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Two online magazine companies reported the following in their financial statements:
BetterWorth
Outdoor Fun
2021
2020
2021
2020
$ 109,104
$ 94,500
$ 172,673
$ 112,500
612,186
Net income
Total stockholders' equity
Earnings per share
Stock price when annual results reported
537,814
3.69
472,151
492,049
3.70
2.60
4.48
55.65
52.29
33.80
60.95
Required:
1-a. Compute the 2021 ROE for each company.
1-b. Which company appears to generate greater returns on stockholders' equity in 2021?
2-a. Compute the 2021 P/E ratio for each company.
2-b. Which company do investors appear to value more?
X Answer is not complete.
Complete this question by entering your answers in the tabs below.
Req 1A
Req 1B
Req 2A
Reg 2B
Compute the 2021 ROE for each company. (Round your answers to 1 decimal place.)
ROE
BetterWorth
18.4 X %
Outdoor Fun
0.2 X %
< Req 1A
Req 1B >

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