Which is trading at a lower price per dollar of earnings

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Question: Abercrombie & Fitch is a close competitor of Deckers Outdoor and Timberland in the apparel industry. Selected financial data for Abercrombie is provided as follows:

238_Equity.png

Required: 1. Calculate the return on equity for Abercrombie in 2009. How does it compare with the return on equity for Deckers Outdoor and Timberland reported in the chapter?

2. Calculate the return on the market value of equity for Abercrombie in 2009. How does it compare with the return on the market value of equity for Deckers Outdoor and Timberland reported in the chapter?

3. Why is the return on the market value of equity for Abercrombie, Deckers Outdoor, and Timberland so much lower than the return on equity?

4. Calculate the price-earnings ratio for Abercrombie in 2009. How does it compare with the price-earnings ratio for Deckers Outdoor and Timberland reported in the chapter? Which is trading at a lower price per dollar of earnings?

Reference no: EM131522222

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