Discuss why ROE is the key ratio under management’s control, how the other ratios impact ROE, and explain how to use the DuPont equation for improving ROE.
If management is to maximize a firm’s value, it must take advantage of the firm’s strengths and correct its weaknesses. (1) comparing the firm’s performance to that of other firms in the same industry and (2) evaluating trends in the firm’s financial position over time. When you finish this chapter, you should be able to: […]