Final answer:
To compare the financial performance of two companies, create a financial data table over three years, including key ratios like profit margin, ROE, and ROA. Financial capital is crucial for business operation and growth and can be obtained through borrowing, bonds, or stock. Active portfolio management usually leads to better investment performance than passive, random selection.
Step-by-step explanation:
To compare the financial performance of two companies, one would typically create a table including financial data for the past three years such as revenue, total assets, current assets, total liabilities, current liabilities, shareholder equity, and net income. Additionally, the table would include financial ratios like profit margin, return on equity (ROE), return on assets (ROA), debt-to-equity ratio, asset turnover ratio, and current ratio. These ratios help to interpret the financial stability and performance of the companies by assessing profitability, efficiency, and leverage.
Financial capital is essential for a company's operation and growth, and it significantly relates to profits as it can be used to fund investments which may lead to profit growth. Companies can obtain financial capital through borrowing, issuing bonds, or offering corporate stock. The choice between these sources of financial capital often depends on factors such as cost, control over the company, and cash flow considerations.
Investment performance can vary significantly based on the investor's approach. An investor who researches and actively manages their portfolio, following financial news and company actions, may generally have a more favorable outcome compared to someone who randomly selects stocks and does not monitor their investments closely. However, market volatility and unexpected events can affect both actively and passively managed portfolios.