Problem

Analyzing an Investment by Comparing Selected RatiosYou have the opportunity to invest $10...

Analyzing an Investment by Comparing Selected Ratios

You have the opportunity to invest $10,000 in one of two companies from a single industry. The only information you have is shown here. The word high refers to the top third of the industry; average is the middle third; low is the bottom third.

Ratio

Company A

Company B

EPS

High

High

Return on equity

High

Average

Debt-to-assets

High

Low

Current

Low

Average

Price/earnings

Low

High

Required:

Which company would you select? Write a brief explanation for your recommendation.

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