$3.$ In $2005,$ IBM had a return on equity of $26\mathrm{.}7$ percent, whereas Hewlett$-$Packard$$s return

was only $6\mathrm{.}4$ percent. Use the decomposed ROE framework to provide possible reasons

for this difference based on the data below:

IBM HP

NOPAT$/$ Sales $9\mathrm{.}0\%2\mathrm{.}7\%$

Sales$/$Net Assets $2\mathrm{.}162\mathrm{.}73$

Effective after tax interest rate $2\mathrm{.}4\%1\mathrm{.}1\%$

Net financial leverage $0\mathrm{.}42-0\mathrm{.}16$