Google, Inc., operates the world’s largest Internet search engine. International Business Machines Corporation (IBM) is one of the world’s largest computer hardware and software companies. The following data were taken from the companies’ December 31, 2013, annual reports:
a. Compute the price-earnings ratios for each company as of March 3, 2014.
b. Which company’s future performance did the financial markets appear to be more optimistic about as of March 3, 2014?
c. Provide some reasons why the market may view one company’s future more optimistically than the other.