Avery?s Rentals, Inc. and Rent-A-Matic, Inc. are two publicly traded rental companies. They reported the following in their 2017 financial statements (in millions of dollars, except per-share amounts and share prices):

Required:

1. Compute the 2017 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 2017?

TIP: Remember that the bottom of the ROE ratio uses the average shareholders? equity.

2. Compute the 2017 P/E ratio for each company (rounded to one decimal place). Do investors appear to value one company more than the other? Explain.

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Avery's Rentals, Inc. 2017 Rent-A-Matic, Inc. 2016 2016 2017 $ 139.6 Net income $ 90.2 761.5 $ 80.3 673.4 $ 76.3 Total shareholders' equity Earnings per share Share price when annual results reported 1,079.2 947.1 1.48 1.11 18.35 1.69 2.10 26.67 19.37 21.54