Analyzing a Change in Return on Common Equity (Easy)

The following numbers were calculated from the financial statements for a firm for 2009 and 2008:

Explain how much of the change in ROCE from 2008 to 2009 is due to operating activities and how much is due to financing activities. Box 12.9 will help you.

Return on common equity (ROCE) Return on net operating assets (RNOA) Net borrowing cost (NBC) 2009 15.2% 2008 13.3% 11.28% 12.75% 2.9% 3.2% Average net financial obligations (millions) Average common equity (millions) $ 2,225 $ 241 $ 4,756 $ 4,173