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This year Baldwin achieved an ROE of 1. Suppose management takes measures that decrease Asset turnover (Sales/Total Assets) next year.

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This year Baldwin achieved an ROE of 1.2%. Suppose management takes measures that decrease Asset turnover (Sales/Total Assets) next year. Assuming Sales, Profits, and financial leverage remain the same, what effect would you expect this action to have on Baldwin's ROE?

Select: 1

1)Baldwin ROE will decrease

2)Baldwin ROE will remain the same

3)Baldwin ROE will increase

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