The Following Information for 2021 Is Provided for Two Public

question 157

Essay

The following information for 2021 is provided for two public companies in the same industry: Instructions
Answer the following questions about the two companies. Use the information provided to calculate the ratios needed to support your answers.
a) Based on the above information, which company is more profitable?
b) About which company are investors more optimistic?
c) In which company would investors prefer to buy shares for growth potential? In which company would they prefer to buy shares if their goal is dividend income?

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Definitions:

Demand for Outputs

The quantity of goods and services that consumers and businesses are willing and able to purchase at various prices during a certain period of time.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a factor of production.

Marginal Product

The extra output that comes from increasing a particular input by one unit, while keeping all other inputs unchanged.

Marginal Revenue Product

The extra revenue generated by employing one more unit of a factor, such as labor or capital.