The following financial data are available for each of two manufacturers of mountain bikes.

Required:
Compute and analyze each of the following seven factors and ratios. For each factor and ratio, does the evidence imply a higher or lower PE for Axel or Bike?

a. Growth in earnings per share. 

b. Financial leverage ratio. 

c. Return on common equity. 

d. Net income as % of sales.

e. Current ratio, receivables turnover, and sales to plant and equipment.

f. Patent position.

g. Return on long-term assets.

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AXEL BIKE Capital structure $10,000,000 $20,000,000 500,000 5%, 20-year notes . Common equit. $30,000,000 Number of common shares . 750,000 *.... Earnings per share Year 6. Year 5. Year 4. 4.25 3.00 3.50 2.50 2.25 1.67 Year 3. 2.75 2.00 Year 2. 1.70 1.95 Sales (Year 6). Net income (Year 6) 30,000,000 2,125,000 30,000,000 .......... 2,250,000 .............. AXEL BIKE Selected balance sheet data at end of Year 6 Cash and cash equivalents. $ 3,000,000 $ 5,850,000 Accounts receivable. 5,000,000 3,750,000 Inventories. 12,000,000 10,000,000 Total current assets. 20,000,000 19,600,000 Accounts payable. 4,000,000 3,500,000 Accrued expenses. Taxes payable. Total current liabilities.. 2,000,000 1,000,000 2,000,000 1,100,000 7,000,000 6,600,000 ****............. Plant and equipment, net . Patents, net . 13,000,000 15,900,000 4,000,000 100,000