Q9.

Below is information related to two companies:

	Company 1				Company 2
Return on assets		8.2	%			6.3	%
Debt to equity		67.2	%			53.4	%

Based on the ratios above, what is generally true about these two companies?

Multiple Choice

• Company 1 has lower profitability and higher risk.

• Company 1 has higher profitability and higher risk.

• Company 1 has lower profitability and lower risk.

• Company 1 has higher profitability and lower risk.