Investors usually consider a variety of information to make investment decisions. The accompanying table displays a sample of large publicly traded corporations and their financial information. Relevant information includes stock price (Price), dividend as a percentage of share price (Dividend), price to earnings ratio (PE), earnings per share (EPS), book value, lowest and highest share prices within the past 52 weeks (52 wk low and 52 wk high), market value of the company’s shares (Market cap), and earnings before interest, taxes, depreciation, and amortization (EBITDA in $ billions).

 

a. As the price to earnings ratio is often considered a better assessment of stock valuation than stock price or earnings per share alone, the financial analyst would like to remove Price and EPS from the data set. Remove these variables from the data set. 

b. The financial analyst is most interested in companies with a higher book value than market cap. Remove all observations that have a lower book value than market cap. How many observations are left in the data set?

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Name Price 3M 189.09 Abbott Lab 45.00 ⠀ Zoetis # 53.07 Dividend 2.48 2.34 1 0.79 ⠀ EBITDA 8.70 4.59 ⠀ 1.70