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Unformatted text preview: Avg. common shareholders equity: (Beg. Year plus end year)/ 2 Disaggregate ROE: o ROCE = (NI/ avg. total assets) x (avg. total assets/ avg. shareholders equity) o = (ROA x financial leverage) Differences between ROA and ROE Financial leverage index: o = ROE/ adjusted ROA o If it is > 1, firm employs debt beneficially o If it is < 1, firm is not using debt successfully Ex. question: o Please compare co. to industry based on profit. Ratios, efficiency ratios, etc.; how are they trending over multi-year period?...
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