Financial information for American Eagle is presented in Appendix A at the end of the book, and

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Financial information for American Eagle is presented in Appendix A at the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book. The stock prices as of February 2, 2013, for American Eagle and Buckle were $20.19 and $47.03, respectively.

Required:
1. Calculate the return on equity for American Eagle and Buckle in 2013. Which company has a higher return on equity?
2. Calculate the return on the market value of equity for American Eagle and Buckle in 2013. Which company has a higher return on the market value of equity?
3. Why is the return on the market value of equity for American Eagle and Buckle so much lower than the return on equity?
4. Calculate the price-earnings ratio on February 2, 2013, for American Eagle and Buckle. Basic earnings per share are provided for each company near the bottom of the income statement. Which is trading at a lower price per dollar of earnings?

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Financial Accounting

ISBN: 978-0078025549

3rd edition

Authors: J. David Spiceland, Wayne Thomas, Don Herrmann

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