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ROE

This topic has 1 reply, 2 voices, and was last updated 2 years ago by Stephen Widberg.

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November 9, 2022 at 7:56 am #671108
phuongmore
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Dear sir,
Why 1 company may have a higher ROE than another company simply because it finance the business through loan capital rather than equity capital?
Thanks
November 9, 2022 at 5:32 pm #671143
Stephen Widberg
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Depends on the numbers. You would get numbers in the exam.
If debt financed – lower profit (because of finance cost) and lower equity (less shares in issue).
All I can say.
🙂
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