Question

Key Figures	Apple				Google
Net income (in millions)	$	45,687			$	19,478
Cash dividends declared per common share	$	2.18			$	-
Common shares outstanding (in millions)		5,336.166				691.293
Weighted-average common shares outstanding (in millions)		5,470.820				687.782
Market value (price) per share	$	112.71			$	771.82
Equity applicable to common shares (in millions)	$	128,249			$	139,036

Required:

1. Compute the book value per common share for each company using these data.

2. Compute the basic EPS for each company using these data.

3. Compute the dividend yield for each company using these data.

4. Compute price-earnings ratio for each company using these data.

5. Based on the PE ratio, for which company do investors have greater expectations about future performance?

Answer 1

Answer
1	Calculation of Book value per common share:
	Particulars	Apple	Google
	a. Equity applicable to common shares (in millions)	$ 1,28,249	$1,39,036
	b. Common shares outstanding (in millions)	$5,336.166	$ 691.293
	c. Book value per common share (a/b)	$     24.03	$ 201.12
2	Calculation of Basic EPS:
	Particulars	Apple	Google
	a. Net income (in millions)	$     45,687	$   19,478
	b. Weighted-average common shares outstanding (in millions)	$5,470.820	$ 687.782
	c. Basic EPS (a/b)	$       8.35	$   28.32
3	Calculation of Dividend yield:
	Particulars	Apple	Google
	a. Cash dividends declared per common share	$       2.18	$         -
	b. Market value (price) per share	$   112.71	$ 771.82
	c. Dividend yield (a/b)	1.93%	0.00%
4	Calculation of Price-earnings ratio:
	Particulars	Apple	Google
	a. Market value (price) per share	$   112.71	$ 771.82
	b. Basic EPS	$ 8.35	$ 28.32
	c. Price-earnings ratio (a/b)	13.5	27.25
5	Because Google has higher PE ratio - investors have greater expectations about future performance of Google Company.