Aaron s Inc and Rent A Center Inc are two publicly traded rental
Aaron’s, Inc., and Rent-A-Center, Inc., are two publicly traded rental companies. They reported the following in their financial statements (in millions of dollars, except per-share amounts and stock prices):
1. Compute the 2013 ROE for each company. Express ROE as a percentage rounded to one decimal place. Which company appears to generate greater returns on stockholders’ equity in 2013?
2. Compute the 2013 P/E ratio for each company (rounded to one decimal place). Do investors appear to value one company’s earnings more than the other’s? Explain.
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