Knowing that you are taking this finance class, a friend asks you about two investment opportunities he is considering. He wants to know which of the firms is using its assets more efficiently to generate sales. Which set of information could help you determine this?
a) Firm A has an asset turnover of 4, and Firm B has an asset turnover of 2.5.
b) Firm A has a leverage ratio of 3, and Firm B has a leverage ratio of 1.5.
c) Firm A has a gross margin of 40%, and Firm B has a gross margin of 35%.
d) Both firms have a return on assets of 5%, but Firm B has a higher profit margin.