46. A company operating in a highly fragmented and competitive industry reported an increase in ROE over the prior year. Which of the following reasons for the increase in ROE is least likely to be sustainable? The company: A. increased the prices of its product significantly. B. decided to make greater use of long-term borrowing capacity. C. implemented a new IT system allowing it to reduce working capital levels as a percentage of assets.

QUESTIONS 45 THROUGH 68 RELATE TO FINANCIAL STATEMENT ANALYSIS

MOCK AND SAMPLE EXAMS CFA LEVEL I MOCK EXAM MORNING 2013

46.

A company operating in a highly fragmented and competitive industry reported an increase in

ROE over the prior year. Which of the following reasons for the increase in ROE is least likely to

be sustainable? The company:

increased the prices of its product significantly.

decided to make greater use of long-term borrowing capacity.

implemented a new IT system allowing it to reduce working capital levels as a percentage of

assets.