Question

Assume three companies in the same industry have the following net margin ratios:

Lemon Co. = 3.7%
Mango Co. = 6.1%
Nectarine Co. = 5.3%

Based on this information alone, which company appears to have the worst net margin ratio?

Answer 1

Lemon Co. has the worst net margin ratio at 3.7%, making it less profitable in comparison to Mango Co. and Nectarine Co., which have net margin ratios of 6.1% and 5.3%, respectively.

Step-by-step explanation:

Based on the information given, Lemon Co. appears to have the worst net margin ratio at 3.7% among the three companies mentioned. The net margin ratio is a profitability metric that compares a company's net income to its revenue, indicating how much profit a company keeps from its total revenue.

In contrast, Mango Co. has the highest net margin ratio at 6.1%, followed by Nectarine Co. at 5.3%. Therefore, of the three companies in the same industry, Lemon Co. keeps the lowest proportion of revenue as profit after accounting for all expenses, taxes, interest, and other income or losses.