Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Company 1 has Profit Margin of 8.2% and a gearing ratio of 67.2%. Company 2 has Profit Margin of 6.3% and a gearing ratio of

image text in transcribed

Company 1 has Profit Margin of 8.2% and a gearing ratio of 67.2%. Company 2 has Profit Margin of 6.3% and a gearing ratio of 53.4%. Based on these ratios, what is generally not true about these two companies Company 2 has lower profitability and lower risk Company 1 has high amount of borrowed funds Company 2 has lower profitability and higher risk. Company 1 has higher profitability and higher risk

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Robo Auditing Using Artificial Intelligence To Optimize Corporate Finance Processes

Authors: Patrick J.D. Taylor, Manish Singh, Nathanael J. L'Heureux

1st Edition

1544511442, 978-1544511443

More Books

Students also viewed these Accounting questions