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Company A has a return on investment of 20%, and Company B has a return on investment of 24%. Assuming both companies have the same investment center average assets, which of the following statements is true?

A. Company A is more efficient in using its assets to generate profits.
B. Company A has higher investment center income than Company B.
C. Company B is more efficient in using its assets to generate profits.
D. Company B has a higher return on investment than Company A.



Answer :

GinnyAnswer
To solve this problem, we need to determine two things: which company is more efficient in using its assets to generate profits, and which company has a higher return on investment (ROI).

1. Efficiency in Using Assets to Generate Profits:
- Company A has an ROI of 20%.
- Company B has an ROI of 24%.

Since efficiency in using assets to generate profits is directly linked to their ROI, higher ROI indicates better efficiency. Comparing the two companies:
- 24% (Company B) is greater than 20% (Company A).

Therefore, Company B is more efficient in using its assets to generate profits.

2. Return on Investment (ROI):
- ROI is used to measure the profitability of an investment.
- Company A's ROI = 20%.
- Company B's ROI = 24%.

Comparing the ROIs directly:
- 24% (Company B) is greater than 20% (Company A).

Hence, Company B has a higher return on investment than Company A.

In summary:
- Company B is more efficient in using its assets to generate profits.
- Company B has higher return on investment than Company A.

Thus, the correct statements are:
- Company B is more efficient in using its assets to generate profits.
- Company B has higher return on investment than Company A.

Therefore, the true statements from the options given are:
- Company B is more efficient in using its assets to generate profits.
- Company B has higher return on investment than Company A.

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