You have the opportunity to invest 10000 in one of two


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

 

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Financial Accounting: You have the opportunity to invest 10000 in one of two
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