Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Textbook Question
Chapter 2, Problem 9P
In early-2015, Abercrombie & Fitch (ANF) had a book equity of $1390 million, a price per share of $25.52, and 6935 million shares outstanding. At the same time, The Gap (GPS) had a book equity of $2983 million, a share price of $41 19, and 421 million shares outstanding
- a. What is the market-t0-book ratio of each of these clothing retailers?
- b. What conclusions can you draw by comparing the two ratios?
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In early 2018, Abercrombie & Fitch (ANF) had a book equity of $1,256 million, a price per share of $22.89, and 68.5 million
shares outstanding. At the same time, The Gap (GPS) had a book equity of $3,130 million, a share price of $31.83, and
384 million shares outstanding.
a. What is the market-to-book ratio of each of these clothing retailers?
b. What conclusions do you draw from comparing the two ratios?
a. What is the market-to-book ratio of each of these clothing retailers?
ANF's market-to-book ratio is
(Round to two decimal places.)
GPS's market-to-book ratio is
. (Round to two decimal places.)
b. What conclusions do you draw from comparing the two ratios?
In a relative sense, the outlook of Abercrombie & Fitch more favorably than The Gap. For every dollar of equity invested in
ANF the market values that dollar today at $1.25 vs. $3.91 for a dollar invested in the GPS. Equity investors are willing to
pay relatively more today for shares of ANF than for GPS because they expect ANF…
In early 2016, the following information was true about Abercrombie and Fitch (ANF) and The Gap (GPS), both clothing retailers. Values (except price per share) are in millions of dollars.
Book Equity
Price Per Share
Number of Shares
$1,294
$20.38
$24.37
ANF
66.22 million
GPS
$2,547
399.49 million
a. What is the market-to-book ratio of each company?
b. What conclusion do you draw from comparing the two ratios?
a. What is the market-to-book ratio of each company?
The market-to-book ratio for ANF is
(Round to two decimal places.)
The market-to-book ratio for GPS is
(Round to two decimal places.)
b. What conclusion do you draw from comparing the two ratios? (Select from the drop-down menus.)
It implies that the market has a more favorably outlook on
than on
International Business Machines (IBM)
has earnings per share of $6.85 and a
P/E ratio of l15.19. What is the stock
price?
Chapter 2 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Ch. 2.1 - Prob. 1CCCh. 2.1 - Prob. 2CCCh. 2.2 - Prob. 1CCCh. 2.2 - Prob. 2CCCh. 2.2 - Prob. 3CCCh. 2.3 - What it is the difference between a firms gross...Ch. 2.3 - What is the diluted earnings per share?Ch. 2.4 - Prob. 1CCCh. 2.4 - Prob. 2CCCh. 2.5 - Prob. 1CC
Ch. 2.5 - Prob. 2CCCh. 2.6 - Why is EBITDA used to assess a firms ability to...Ch. 2.6 - Prob. 2CCCh. 2.6 - Prob. 3CCCh. 2.6 - Prob. 4CCCh. 2.7 - Describe the transactions Enron used to increase...Ch. 2.7 - Prob. 2CCCh. 2 - Prob. 1PCh. 2 - Prob. 2PCh. 2 - Consider the following potential events that might...Ch. 2 - What was the change m Global Conglomerates book...Ch. 2 - Find online the annual 10-K report for Costco...Ch. 2 - In early 2012, General Electric (GE) had a book...Ch. 2 - In early-2015, Abercrombie Fitch (ANF) had a book...Ch. 2 - Prob. 10PCh. 2 - Suppose that in 2016, Global launches an...Ch. 2 - Find online the annual 10-K report for Costco...Ch. 2 - Prob. 13PCh. 2 - Prob. 14PCh. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - Suppose a firms tax rate is 35%. a. What effect...Ch. 2 - Prob. 18PCh. 2 - Prob. 19PCh. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - Prob. 22PCh. 2 - Can a firm with positive net income run out of...Ch. 2 - Suppose your firm receives a 5 million order on...Ch. 2 - Nokela Industries purchases a 40 million...Ch. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - Find online the annual 10-K report for Costco...Ch. 2 - Prob. 28PCh. 2 - For fiscal year end 2015, Wal-Mart Stores, Inc....Ch. 2 - Prob. 30PCh. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - Use the data in Problem 8 to determine the change,...Ch. 2 - You are analyzing the leverage of two firms and...Ch. 2 - Prob. 37PCh. 2 - Prob. 38PCh. 2 - Prob. 39PCh. 2 - Prob. 40PCh. 2 - Prob. 41PCh. 2 - Prob. 42PCh. 2 - Consider a retailing firm with a net profit margin...Ch. 2 - Prob. 44PCh. 2 - Prob. 45P
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