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CIMA Exam CIMAPRO19-P02-1 Topic 4 Question 55 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam
Question #: 55
Topic #: 4
[All CIMAPRO19-P02-1 Questions]

Juan is looking to invest in the mining industry. He has narrowed his options down to two rival companies, both with sales of 200m. Company A has an EBIT of 10m whereas Company B has an EBIT of 14m.

This would suggest that Company B is the better investment but Juan is suspicious that Company B has more financial backing than Company A.

Which ratios will tell him which company will use his investment the best?

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Suggested Answer: A, B

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