On August 1, 2007 the Dell Computer Corporation's stock closed trading at $ 27.76 per share while Apple Corporation's shares closed at $ 133.64. Does this mean that because Apple's stock price is roughly four times that of Dell's, Apple is the more valuable company? Interpret the prices for these two firms using the information found here:
(Most recent 12 months) Dell 2007 Apple 2007
Net Income ($ millions) $3,572 $3,130
Shares outstanding (millions) 2300 869.16
Earnings per share ($) $1.55 $3.60
Price per share (8/1/07) $27.76 $133.64
Price-to-earnings ratio (PE ratio) 17.91 37.11
Book value of common equity ($ millions) $4,129 $9,984
Book value per share ($) $1.80 $11.49
Market-to-book ratio 15.42 11.63
It appears that Apple enjoys a (lower or higher) price per share when compared to its 2007 earnings but a (lower or higher) price when compared to the book value of the firm's equity. The (higher or lower) market-to-book ratio for Apple reflects that fact that Apple has used a great deal (less or more) equity and (more or less) debt to finance its operations.

It appears that Apple enjoys a (higher) price per share when compared to its 2007 earnings but a (lower) price when compared to the book value of the firm's equity. The (lower) market-to-book ratio for Apple reflects the fact that Apple has used a great deal (more) equity and (less) debt to finance its operations.

Apple will enjoy a higher price per share because Apple Corporation's shares closed at $ 133.64 while Dell Computer Corporation's stock closed trading at $ 27.76 per share. Also, the lower market-to-book ratio for Apple of $11.63 compared to Dell's market to book ratio of $15.42 shows that Apple used more of equity and less debt for its business.