PA$11-5($Algo$)$ Computing and Interpreting Return on Equity $($ROE$)$ and Price$/$Earnings $($P$/$E$)$ Ratios $[$LO $11-5]$

Two online magazine companies reported the following in their financial statements:

Outdoor Fun BetterWorth

$2021202020212020$

Net income $ $111,000$ $ $108,804$ $ $92,420$ $ $172,373$

Total stockholders' equity $597,186522,814457,151477,049$

Earnings per share $3\mathrm{.}403\mathrm{.}392\mathrm{.}304\mathrm{.}18$

Stock price when annual results reported $54\mathrm{.}9051\mathrm{.}5433\mathrm{.}0560\mathrm{.}20$

Required:

$1-$a$.$ Compute the $2021$ ROE for each company.

$1-$b$.$ Which company appears to generate greater returns on stockholders$$ equity in $2021?$

$2-$a$.$ Compute the $2021$ P$/$E ratio for each company.

$2-$b$.$ Which company do investors appear to value more?PA$11-5($Algo$)$ Computing and Interpreting Return on Equity $($ROE$)$ and Price$/$Earnings $($P$/$E$)$ Ratios $[$LO $11-$

$5]$

Two online magazine companies reported the following in their financial statements:

Required:

$1-$a$.$ Compute the $2021$ ROE for each company.

$1-$b$.$ Which company appears to generate greater returns on stockholders' equity in $2021?$

$2-$a$.$ Compute the $2021$ P$/$E ratio for each company.

$2-$b$.$ Which company do investors appear to value more?