The following decomposition of ROE Indicates what about financial leverage and ROE? ...
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Accounting
The following decomposition of ROE Indicates what about financial leverage and ROE?
A decomposition of ROE for Ouyang Inc. is as follows: Financial Information ROE Tax burden 0.34 0.34 Interest burden EBIT margin | 12% | 14% Asset turnover Leverage 2011 2012 0.131 0.131 0.82 0.70 1.7 1.7 2.3 2.3 The higher interest rate offset the improvement in profitability, leaving ROE The lower interest rate offset the improvement in profitability, leaving ROE unchanged The lower interest rate offset the improvement in profitability, leaving leverage unchanged
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