a) Ratios are often used to compare the performance of companies. Briefly discuss two (2) reasons why ratios may not be appropriate for use in making comparisons between two companies. b) Mr Chan the CEO of ABC Company owns 70% of the shares. He makes the following statement: “Since I own such a large amount of shares in the company, any decision I make is always in the best interests of the shareholders”. Appraise the statement and discuss whether you agree with Mr Chan or not.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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a) Ratios are often used to compare the performance of companies. Briefly discuss two (2) reasons why ratios may not be appropriate for use in making comparisons between two companies.

b) Mr Chan the CEO of ABC Company owns 70% of the shares. He makes the following statement: “Since I own such a large amount of shares in the company, any decision I make is always in the best interests of the shareholders”.

Appraise the statement and discuss whether you agree with Mr Chan or not.

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