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The 2019 financial statements of Companies A and B show the following data: Item Net Sales Revenue Net Profit Margin Average Total Assets Financial Leverage

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The 2019 financial statements of Companies A and B show the following data: Item Net Sales Revenue Net Profit Margin Average Total Assets Financial Leverage Percentage* Interest Expense (Net of taxes) Company A $150,000 6% $40,000 4% Company B $200,000 5% $80,000 3% $1,000 $800 * Defined as Return on Equity-Return on Assets Required: 1. For each company, compute the following: (8 marks available) Company A Company B Item Net Income Return on Equity Return on Assets Average Owners' Equity 2. Assuming both Company A and Company B are in the same industry, which of the two appears to be a better investment and why? (4 marks available)

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