Company A has net income of $55,000 and sales of $600,000 during the year. Their average total assets were $340,000.
Company B has net income of $100,000 and sales of $1,200,000 during the year. Their average total assets were $800,000.
Which of the following is true regarding the profitability of these two companies?
A. Company A is more profitable based on the return on asset ratio, but not the profit margin.
B. Company B is more profitable based on the return on asset ratio, but not the profit margin.
C. Company B is more profitable based on both the return on asset ratio and profit margin.
D. Company A is more profitable based on both the return on asset ratio and profit margin.