PA11-5 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 BusinessWorld 2015 Fun and Games 2015 2014 2014 Net income Total stockholders' equity Earnings per share Stock price when annual results reported $105,000 $107,604 $ 85,500 $171,173 537,186 462,814 397,151 417,049 2.98 57.20 1.80 51.90 2.19 48.54 1.10 30.05 Required 1-a. Compute the 2015 ROE for each company. (Round your answers to 1 decimal place.) Answer is complete but not entirely correct. ROE BusinessWorld 19.5 % Fun and Games 21.5 % 1-b. Which company appears to generate greater returns on stockholders' equity in 2015? BusinessWorld Fun and Games Both Companies appear to generate the same return on equity 2-a. Compute the 2015 P/E ratio for each company. (Round your answers to 1 decimal place.) P/E Ratio BusinessWorld Fun and Games times times 2-b. Which company do investors appear to value more? BusinessWorld Both Companies appear to generate the same return on equity O Fun and Games