Your company's profitability, measured as the Return on Equity (ROE), has increased from 15.22% to 16.87% In
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Question:
Your company's profitability, measured as the Return on Equity (ROE), has increased from 15.22% to 16.87% In the last two years. Your intuition tells you that this improved profitability has been generated thanks to enhanced cost control in the company. Use the slected information provided in Table 1 to confirm or deny this assumption. Clearly state what has caused the increase. All values are in thousands.
Please answer the following: Is the increased profitability due to improved cost control? If yes, explain. If no, then explain the cause of the increase.
Important bote: to be given full credit,
TABLE 1 2021 2019
ROE 16.87% 15.22%
Sales 2242 1500
Net Income 41 28
Total Assets 1200 588
Equity 243 184
Expert Answer:
To determine the cause of the increased profitability we need to analyze the relevant financial rati... View the full answer
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