This year Chester achieved an ROE of 16.0%. Suppose the Board of Directors of Chester mandates that management take measures to increase financial Leverage (=Assets/Equity) next year. Assuming Sales, Profits, and Assets remain the same next year, what effect would you expect this new Leverage policy will have on Chester ROE? Select : 1 Save Answer
Chester ROE will decrease.
Chester ROE will increase.
Chester ROE will remain the same.