Asked by Diedre McCoy on Jun 19, 2024
Verified
If an investor is considering two different companies as an investment,the investor should choose to invest with the company that has the highest net profit margin.
Net Profit Margin
A profitability ratio calculated by dividing net income by revenue, showing how much of each dollar in revenues results in profit.
- Gain insight into the variables that affect earnings per share and the price/earnings ratio.
Verified Answer
LM
Lucia MartinJun 21, 2024
Final Answer :
False
Explanation :
Net profit margin alone is not a sufficient indicator to make investment decisions. Other factors such as industry trends, company growth potential, financial stability, and management should also be taken into consideration.
Learning Objectives
- Gain insight into the variables that affect earnings per share and the price/earnings ratio.
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