This year Andrews achieved an ROE of 19.9%. Suppose next year the profit margin (Net Income/Sales)

This year Andrews achieved an ROE of 19.9%. Suppose next year the profit margin (Net Income/Sales) increases. Assuming sales, assets and financial leverage remain the same next year, what effect would you expect this action to have on Andrews’s ROE?

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•  Andrews ROE will remain the same.

•  Andrews ROE will increase.

•  Andrews ROE will decrease.