Two music companies reported the following in their 2017 financial statements (in thousands of dollars, except earnings 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?

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

3. Sound Jonx reacquired 5,000 (thousand) common shares in 2017 at $13 per share. Recalculate the company?s ROE for 2017 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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Sound Jonx Urban Youth 2017 2016 2017 2016 $ 24,302 300,399 Net income Total shareholders' equity $ 41,500 516,302 $ 36,739 521,198 $ 27,500 387,101 Earnings per share Share price when annual results reported 0.95 1.00 1.10 0.85 20.35 14.45 18.50 16.15