P6-3 Explaining difference in P/E ratios

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The price/earnings (P/E) rations in August 2003 for two groups of companies were

Company                         P/E Ratio

Group A

Amazon.com                    112

General Motors                 17

Krispy Kreme Doughnuts    52

Microsoft                         27

Group B

Bob Evans Farms              13

Cheeseka Factory              31

Krispy Kreme Doughnuts    52

Wendy’s International       15

Required:

1. What factors might explain the difference in the P/E ratios of the firms in Group A?
2. What factors might explain the difference in the P/E ratios of the restaurant firms in Group B?