History Bookmarks People Window Help D Math! 48PreTest 1 × Connect scadia.instructure.com/groups/285774/discussion, topics/7448159 e At September 30. × Orange: Connect XQ Accounting 2 Chapter 13 team discussion problem - Team 4 From Individually complete one part (1. 2,3, or 4) of BTN 13-2 on page 583 of the textbook (reproduced below for reference). Each student on your team should complete a different part (1, 2.3, or 4); teams with 3 members may complete any three parts. In your post, (1) calculate the required metric for both companies, (2) show all calculations, and (3) comment briefly on your solutions IMPORTANT INSTRUCTIONS: 1. Navigate to your Group Homepage. Use your Group\'s Announcement tool to decide among your group-mates who will work on which part (1, 2, 3, or 4) 2. Once your roles are agreed, post the solution to your part to your group\'s designated \"Chapter 13 team discussion problem\" Discussion forum. 3. For full credit, be sure to comment on at least two of your teammates\' posts. Comments may be posted up to 24 hours after the initial team problem submission deadline BTN 13-2 Use the following comparative figures for Apple and Google. 2 Once your roles are agreed. post the solution to your part to your group\'s designated Key Figures Apple Google Net income (in millions) $ 53.394 $ 16.348 Cash dividends declared per common share1.98 S Common shares outstanding (in millions)5.578.753 687.348 Weighted-average common shares outstanding (in millions) 5,753.421 684.626
1. Book value per common share = Equity applicable to common shares/no. of common shares outstanding.
The figure for Apple = 119,355/5578.753 = 21.39
The figure for Google = 120,331/687.348 = 175.07
2. Basic EPS = Net income/weighted average common shares.
The figure for Apple = 53,394/5753.421 = 9.28
The figure for Google = 16,348/684.626 = 23.88
3. Dividend yield = cash dividend/Market value per share
The figure for Apple = 1.98/107 = 1.85%
Google will have no dividend yield as it had declared no cash dividend.
Clearly Google is a growth stock. A growth stock usually does not pay dividends and hence has no dividend yield. The earnings of growth stocks are expected to beat the average growth rate of the market.
4. P/E ratio = Price/EPS
For Apple = 107/9.28 = 11.53
For Google = 775.10/23.88 = 32.46
Comments – After viewing the above ratios it is safe to say that Google is a premium stock when compared to Apple. Google’s P/E ratio is more than twice of Apple and this signifies that the stock of Google is commanding a rich valuation in the market. Investors are expecting Google to grow at a faster rate than Apple and hence this premium. Apple, on the other hand, is not a growth stock, and is hence compensating its investors through paying dividends.
Homework Sourse
