(Answered) Companies abc and xyz are similar in asset size 3 billion

Management Studies

Companies ABC and XYZ are similar in asset size ($3 billion), asset volatility (30%),ROE (20%) and dividend-payout ratio (30%), but di?er in the following way:

	ABC	XYZ
Profit Margin	10%	12%
Asset Turnover	160%	120%

(a) Which company riskier? Brie?y explain why.

(b) What is the growth rate of each company?

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