Question: PB11-5 (Algo) Computing and Interpreting Return on Equity (ROE) [LO 11-5] Two music companies reported the following in their financial statements: Net income. Total

music companies reported the following in their financial statements: Net income. Total

stockholders' equity Earnings per share Stock price when annual results reported Required:

Urban Youth Sound Jonx 2021 $ 27,400 377,101 2020 $ 24,202 290,399

2021 $ 41,600 2020 $ 36,639 506,302 1.10 1.00 0.95 19.85 18.00

PB11-5 (Algo) Computing and Interpreting Return on Equity (ROE) [LO 11-5] Two music companies reported the following in their financial statements: Net income. Total stockholders' equity Earnings per share Stock price when annual results reported Required: Urban Youth Sound Jonx 2021 $ 27,400 377,101 2020 $ 24,202 290,399 2021 $ 41,600 2020 $ 36,639 506,302 1.10 1.00 0.95 19.85 18.00 15.65 511,198 0.85 13.95 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?

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