What effect would you expect this new leverage policy

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Reference no: EM131913650

This year Andrews achieved an ROE of 13.4%. Suppose the Board of Directors of Andrews mandates that management take measures to decrease 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 Andrews's ROE?

ROE will remain the same

ROE will increase

ROE will decrease

Reference no: EM131913650

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