What is the market-to-book ratio of each of these clothing

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1.In November 2007, Abercrombie and Fitch (ANF) had a book equity of $1458 million, a price per share of $75.01, and 86.67 million shares outstanding. At the same time, The Gap (GPS) had a book equity of $5194 million, a share price of $20.09, and 798.22 million shares outstanding.

a. What is the market-to-book ratio of each of these clothing retailers?

b. What conclusions can you draw by comparing the two ratios?

2.Suppose that in 2010, Global launches an aggressive marketing campaign that boosts sales by 15%. However, their operating margin falls from 5.57% to 4.50%. Suppose that they have no other income, interest expenses are unchanged, and taxes are the same percentage of pretax income as in 2009.

a. What is Global’s EBIT in 2010?

b. What is Global’s income in 2010?

c. If Global’s P/E ratio and number of shares outstanding remains unchanged, what is Global’s share price in 2010?

Reference no: EM13343722

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