[SOLVED] This year Andrews achieved an ROE of 21.6%. Suppose the Board of Directors of Andrews mandates that management take measures to decrease financial Leverage (Assets/Equity)
This year Andrews achieved an ROE of 21.6%. Suppose the Board of Directors of Andrews mandates that management take measures to decrease financial Leverage (Assets/Equity) next year. Assuming Sales, Profits, and Assets remain the same next year, what effect would you expect this new Leverage policy will have on Andrews's ROE?
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- Andrews ROE will decrease
- Andrews ROE will remain the same
Andrews ROE will increase
