Question
Table 2.4 in Berk and DeMarzo (2020) provide key financial ratios for large US firms updated in Spring of 2018. Within this table, the authors
Table 2.4 in Berk and DeMarzo (2020) provide key financial ratios for large US firms updated in Spring of 2018. Within this table, the authors highlight the 25%, median, and 75% quartiles for each type of ratio. Using examples of firms, explain why there are significant differences between the 25% and 75% quartiles for large companies specifically focusing on the Net Profit Margin, Asset Turnover, and the Equity Multiplier. How would you explain the differences between firms in the lower and upper quartiles (hint: see the DuPont identity for guidance)?
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