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PLEASE DEFINE HIGHER MARGIN VERSUS LOWER MARGIN OF A COMPANY. For Example, does lower ROE equate...

PLEASE DEFINE HIGHER MARGIN VERSUS LOWER MARGIN OF A COMPANY.

For Example, does lower ROE equate firms with a lower margin Assignment.

Or does higher ROE equate firms with higher margin. Thank you.

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Answer #1

Margin refers to purely profitability of business, generally growth companies have decent Margins ROE is more concerned with Return on Equity, ROE = Net Income / Equity. A firm could have higher margins in terms of profitability but poor management leading to higher expenses and lesser Net Income and ultimately lower ROE.

Margin is predominantly dependent on turnover and profit percentage whereas ROE is based on upon net income available to share holders.

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