2006 2007 EBIT/ revenue .15 .1 revenue/assets 1 1.5 assets/equity 2 2.5 tax burden (net income/ EBT) .7 .7 interest burden(EBT/EBIT) .95 .95 ROE: A. decreased because company profits fell b. increased due to increase in Turnover and leverage c. increased because the company’s asset turnover increased d. remained constant
2006 roe= .1995 2007 roe= .249375 B…both leverage & turnover increased…