What is the growth rate of company

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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?

(c)  What does your answer in part above say about this relationship between the growth rate and risk?

Reference no: EM131296604

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