“There are two competing companies. One is named Appy and the other is called Andy. Both companies make competing widgets,” Nigam Arora writes for MarketWatch.
“Appy sells 30 widgets at $600 per widget. Appy makes gross profit of $240 per widget. The total gross profit made on 30 widgets is $7200,” Arora writes. “Andy sells 50 widgets at $200 per widget. Andy makes a gross profit of $20 per widget. The total gross profit made on 50 widgets is $1000.”
“In the foregoing example Andy outsold Appy by 2 to 1, but Appy made 720% more gross profits that Andy,” Arora writes. “Which company is the better investment, Appy or Andy?”
Arora writes, “Apple is like the hypothetical company Appy and Android is like the hypothetical company Andy.”
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