Question
A firm uses 70% debt financing at 10% interest. Its ROE
rises despite flat operating profits. What explains this phenomenon?Solution
Increased ROE without rise in EBIT indicates positive financial leverage—use of debt to magnify returns to equity.
More Financial Statement Analysis Questions
Who among the following person attends the seminar event along with F in the same month?
- Seven boxes, F, G, H, I, J, K and L, are kept one above other, such that bottommost box is numbered as 1 and topmost box is numbered as 7. F is a prime num...
Which of the following is true regarding Aman?
How many people have birthdays before S?
E likes which of the following game?
Find the odd one out.
which of the following combination is true?
Six trucks with codes – A1Z, B2Y, C3X, D4W, E5V, and F6U are parked around a circular field facing away from the centre. B2Y is parked immediate left ...
Who lives in Flat – Z of floor – 2?
Which of the following does not belong to a group?
