QUESTIONS 45 THROUGH 68 RELATE TO FINANCIAL STATEMENT ANALYSIS

49. - MOCK AND SAMPLE EXAMS CFA LEVEL I MOCK EXAM MORNING 2012
MOCK AND SAMPLE EXAMS CFA LEVEL I MOCK EXAM MORNING 2012
49. Selected information for a company and the common size data for its industry are provided below. Company (£) Common SizeIndustry Data(% of sales)EBIT 76,000 28.0Pretax profit 66,400 19.6Net income 44,500 13.1Sales 400,000 100.0Total assets 524,488 140.0Total equity 296,488 74.0ROE 15.0% 17.7%Which of the following is most likely a contributor to the company’s inferior ROE compared to that of the industry? The company’s: A. tax burden ratio. B. interest burden ratio. C. financial leverage ratio.