You have the opportunity to invest $10,000 in one of two companies that are part

Question

You have the opportunity to invest $10,000 in one of two companies that are part of the same industry. The only information you have about the companies is presented below. Assume that high means in the top third of the industry, average means in the middle third and low is in the bottom third. Based on this information, which company would you select? Explain you selection. Ratio Company A Company B ROA Average High Profit Margin Low High Financial Leverage Low High Current ratio High Low Price/Earnings Average High Debt-to-Equity Low High

Explanation / Answer

since company B has high value of Profit margin as well as P/E ration so it will be beneficial to invest in it as compared to A

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