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Rahul is a professional investor who generally invests in the IT sector. Recently, one of his friends suggested that he invest in the FMCG industry,

Rahul is a professional investor who generally invests in the IT sector. Recently, one of his friends suggested that he invest in the FMCG industry, as it is more promising in terms of returns. Rahul considered his friends advice and identified two potential companies to invest in. The data he collected about these companies is shown in the table below.
Company A Company B
Year 0 Year 1 Year 0 Year 1
Net Profit Margin 0.150.20.20.2
Asset Turnover Ratio 22.0822
Financial Leverage 2.52.41.52.5
ROE 0.7510.61
As you must have noticed, both the companies have an ROE of 1, but Company B has shown a significantly better improvement over the previous years ROE than Company A. According to you, which is a better company to invest in?

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