a decomposition of roe for company a and company b is as follows an analyst is most 1557090

A decomposition of ROE for Company A and Company B is as follows:

An analyst is most likely to conclude that:

A. Company A’s ROE is higher than Company B’s in FY15, and one explanation consistent with the data is that Company A may have purchased new, more efficient equipment.

B. Company A’s ROE is higher than Company B’s in FY15, and one explanation consistent with the data is that Company A has made a strategic shift to a product mix with higher profit margins.

C. Th e difference between the two companies’ ROE in FY15 is very small and Company A’s ROE remains similar to Company B’s ROE mainly due to Company A increasing its financial leverage.