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  3. this year baldwin achieved an roe of 22.9%. suppos

This year Baldwin achieved an ROE of 22.9%. Suppose the Board of Directors of Baldwin...

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Accounting

This year Baldwin achieved an ROE of 22.9%. Suppose the Board of Directors of Baldwin 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 Baldwin ROE?

Baldwin ROE will decrease.

Baldwin ROE will increase.

Baldwin ROE will remain the same.

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