The 20X2 Financial Statements of Companies a and B Showed

The 20X2 financial statements of Companies A and B showed the following: $$\begin{array} { | l | r | r | } \hline \text { tem } & \text { Company } \mathrm { A } & \text { Company } \mathrm { B } \\\hline \text { Net sales revenue } & \$ 150,000 & \$ 200,000 \\\hline \text { Profit margin } & 6 \% & 5 \% \\\hline \text { Total assets } & \$ 40,000 & \$ 80,000 \\\hline \text { Financial leverage } & + 4 \% & + 3 \% \\\hline \text { Interest expense (net of tax) } & \$ 1,000 & \$ 800 \\\hline\end{array}$$

$\begin{array}{|l|l|c|c|}\hline \begin{array}{l}\text { Part A: For } \\\text { each } \\\text { company, } \\\text { compute } \\\text { the items } \\\text { listed in the } \\\text { following } \\\text { tabulation. } \\\end{array} & \text { ltem } & \text { Company A } & \text { Company B } \\\hline \text { a. } & \text { Reported profit } & \$ & \$ \\\hline \text { b. } & \text { Return on assets } & \text { \% } & \% \\\hline \text { c. } & \text { Return on equity } & \% & \% \\\hline \text { d. } & \text { Amount of owners' equity } & \$ & \$\\\hline\end{array}$ Part B: Which company do you believe is a better investment? Justify your response .