Company X is competing with company Y. These are their ratios: x y Profit Margin .144 .172 ROA .066 .062 ROE .118 .154 Based on Profitability, which company is doing better when compared to the other?
Company X is competing with company Y. These are their ratios: x y Profit Margin .144 .172 ROA .066 .062 ROE .118 .154 Based on Profitability, which company is doing better when compared to the other?
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
Section: Chapter Questions
Problem 1PS
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Question
Company X is competing with company Y. These are their ratios:
| x | y | |
| Profit Margin | .144 | .172 |
| ROA | .066 | .062 |
| ROE | .118 | .154 |
Based on Profitability, which company is doing better when compared to the other?
Expert Solution
Step 1
Profit margin is the margin calculated by comparing the sale value with the cost associated with it. Return on Assets means the return generated by the company with the available resources (or) assets. Return on Equity means the return generated by the company and given to the equity holders.
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