ALEXANDER INC.

Nex income / Sales Reverwe

= 5,000 0, of

/ Net Income Rohe

® Alexander, Inc should generate 4.000 to recover from their loss from

fraud.

b. Why are these amounts different? (5 points)

© The amounts differ because cach company has a different net income ratio

which is 10% for Clever Inc. while 25% for Alexander Inc.

¢. Which company will probably have to generate less revenue to recover the losses?
(5 points)

® The greater the Net Income Ratio, the less additional revenue is required

in order to recover the loss from fraud. And in this case, Alexander Inc

had a higher Net Income Ratio; they just required 4,000 to make up the

difference, hence Alexander company will have to generate less revenue

than the other.