This year Andrews achieved an ROE of


This year Andrews achieved an ROE of 16.8%. Suppose the Board of Directors of Andrews mandates that management take measures to increase 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 ROE?

Select: 1


Andrews ROE will remain the same.


Andrews ROE will increase.


Andrews ROE will decrease.


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11-09-20 | 10:17:18

to increase leverage assets need to increase and equity reduces. that can only happen

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