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Let's assume that there are two firms, G and C. Firm G has grown at the...

Let's assume that there are two firms, G and C. Firm G has grown at the rate of 30% over the past year. I mean its total assets has increased by 30% during the year 2018. On the other hand, firm C has contracted by 5%, in other words, its assets has declined by 5%. My question is which firm would you be more willing to invest in the stock market for 2019?

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Answer #1

It is extremely difficult to decide about which company to invest in with given information.

I mean for the first company, it is possible that the company has borrowed from the bank and that’s why its assets has increased, similarly for the second company it is possible that the liability has been paid and that’s what asset has decreased.

So you need to collect some more information, like Earning per share of the company, Dividend pay-out ratio, Return on asset, etc.

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