Instructions

question 79

Essay

Instructions
a. Does horizontal analysis provide a useful tool to compare the above companies? Explain your answer using an example to demonstrate how it is useful or not useful.
b. Suggest a ratio that could be used as an alternative to evaluate the profitability of the two companies and calculate the ratio. Compare the companies' profitability based on your calculations.

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Definitions:

Advertising

The occupation or act of generating advertising content for business products or services.

Price Discrimination

A selling strategy where a provider charges different prices for the same product or service to different customers, not based on the cost of production.

Arbitraging

The process of buying and selling assets across different markets or in different forms to exploit price differences for profit.

Vertical Integrate

A strategy where a company expands its business operations into different steps on the same production path, such as when a manufacturer owns its supplier and/or distributor.