Suppose Company A and Company B are in the same industry and both of them have ROAs of 6 percent. Company A has a profit
Posted: Tue Apr 26, 2022 10:45 am
Suppose Company A and Company B are in the same industry and
both of them have ROAs of 6 percent. Company A has a profit
margin of 4 percent and an asset turnover of 1.5 times.
Company B has a profit margin of two percent and an asset
turnover of three times. The industry average profit margin is
3 percent, the asset turnover is 2.5 times, and the ROA for the
industry is 7.5 percent. Because both companies have below
average ROAs, what actions would you recommend for these two
companies?
both of them have ROAs of 6 percent. Company A has a profit
margin of 4 percent and an asset turnover of 1.5 times.
Company B has a profit margin of two percent and an asset
turnover of three times. The industry average profit margin is
3 percent, the asset turnover is 2.5 times, and the ROA for the
industry is 7.5 percent. Because both companies have below
average ROAs, what actions would you recommend for these two
companies?