Here are some accounting numbers and market values (in millions) for Hewlett-Packard and Gateway for 2002. These two computer manufactures are considered to be comparables for Dell, Inc.

a. Calculate price-to-sales, price-earnings (P/E), and price-to-book (P/B) ratios for Hewlett-Packard and Gateway.
b. Dell reported the following number for fiscal year2002:
Sales .......... $31,168 million
Earnings ........ $ 1,246 million
Book value ....... $ 4,694 million
Apply multiples for Hewlett-Packard and Gateway to price Dell's 2,602 million outstanding shares. What difficulties did you encounter?

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Market Value Book Value $13,953 1,565 Sales Earnings Hewlett-Packard Co. Gateway, In. $45,226 6,080 $624 (1.290) S32,963 1,944