Two magazine companies reported the following in their 2012 financial statements:

Required:
1. Compute the 2012 ROE for each company (express ROE as a percentage rounded to one decimal place). Which company appears to generate greater returns on stockholders' equity in 2012?
2. Compute the 2012 P/E ratio for each company. Do investors appear to value one company more than the other? Explain.

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BusinessWorld Fun and Games 20122011 2011 Net income Total stockholders' equity Earnings per share Stock price when annual results reported $110,000 $108,604 91,420$172,173 467,049 3.98 59.70 587,186 3.20 54.40 512,814 3.19 51.04 447,151 2.10 32.55