Forbes annually provides a list of the most valuable companies in the world. Below are the
top 10 most valuable companies in the United States from the 2012 Forbes 2000.
In billions of USD
Apple
ExxonMobil
Microsoft
IBM
Chevron
General Electric
Wal-Mart Stores
Google
Berkshire Hathaway
AT&T
Net Income
33.0
41.1
23.5
15.9
26.9
14.2
15.7
9.7
10.3
3.9
Assets
138.7
331.1
112.2
116.4
209.5
717.2
193.4
72.6
392.6
270.3
Market Value
546.0
407.4
273.5
238.7
218.0
213.7
208.4
203.2
202.2
187.3
As an analyst for a securities brokerage, a client asks the following questions about some of
the figures. Assume the client is a physician, so use the proper tone to answer their
questions. Cite any sources you use to respond to these questions.
2-1. Microsoft has way more market value than assets. How can a company be worth more
than its total assets?
2-2. Conversely, why might a companyâs (e.g., AT&T) market value be less than its total
assets?
2-3. For each company, compute total assets to total market value. What factors must the
market be considering in valuing these companies that are not captured on their balance
sheets?
2-4. The P/E ratio (price-earnings ratio) can be defined as market price per share divided by
earnings per share. It also may computed by computing total market value divided by net
income. WHY?
2-5. Compute P/E ratio for these companies. What factors affect P/E ratios?