Essay
Below are three relationships that are important to the determination of profitability.Assume assets were $22,900,000 on Dec.31,2008.1.Operating leverage = Earnings before interest but after taxes
Average assets.
2.Financial structure leverage = Net income available to common shareholders
Earnings before interest but after taxes
3.ROCE = ROA × Common earnings leverage × Financial structure leverage
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ROCE has deteriorated somewhat over the ...View Answer
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