Question: Firm A has a return on Equity (ROE) equal to 24%, while firm B has an ROE of 15% during the same year. Both firms

Firm A has a return on Equity (ROE) equal to 24%, while firm B has an ROE of 15% during the same year. Both firms have a total liabilities ratio (Total liabilities/Assets) equal to 0.8. Firm A has an asset turnover ration of 0.8, while firm B has an asset turnover ratio equal to 0.4. From this information, which of the two firms has a higher profit margin? Show calculations and profit margins for both firms. (Hint: Use Dupont equation)

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