5. Suppose an analyst has gathered the following information about two companies: Company A Company B Revenues 10,000 3,

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5.
Suppose an analyst has gathered the following information abouttwo companies:
Company A
Company B
Revenues
10,000
3,000
Gross profit
4,000
1,500
Operating profit
2,000
700
Net income
1,300
500
Total assets
8,000
2,400
Total debt
3,000
400
a. Using common-size analysis, which company is more profitable?Explain and support your answer.
b. Which company has a higher ROE? Which company do you preferas an investment opportunity? Explain and support your answer.