Question: Google, Inc., operates the worlds largest Internet search engine. International Business Machines Corporation (IBM) is one of the worlds largest computer hardware and software companies.

Google, Inc., operates the world€™s largest Internet search engine. International Business Machines Corporation (IBM) is one of the world€™s largest computer hardware and software companies. The following data were taken from the companies€™ December 31, 2013, annual reports:

Required
a. Compute the price-earnings ratios for each company as of March 3, 2014.
b. Which company€™s future performance did the financial markets appear to be more optimistic about as of March 3, 2014?
c. Provide some reasons why the market may view one company€™s future more optimistically than the other.

Google, Inc. IBM S12,920 $ 38.82 $16,483 15.06 Net earnings (in millions) Earnings per share The following data were taken from public stock-price quotes: Stock price per share on March 3, 2014 $1,202.69 $184.26 (Two months after the end of their 2013 fiscal years.)

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