Question: Table 2.1 compares companies according to different profitability measures. a) Which two of the six performance measures do you think are the most useful indicators

Table 2.1 compares companies according to different profitability measures.
a) Which two of the six performance measures do you think are the most useful indicators of how well a company is being managed?
b) Is return on sales or return on equity a better basis on which to compare the performance of the companies listed?
c) Several companies are highly profitable yet have delivered very low returns to their shareholders. How is this possible?

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There is no unambiguously correct answer here All performance measures are imperfect Important criteria are first consistency with value maximization ... View full answer

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