medium · Principles of Finance
In the Five-Way DuPont decomposition, how does a significant increase in capital expenditure (funded by cash) primarily affect the ROE if the new assets are not yet productive?
- The EBIT Margin will increase, raising ROE
- The Asset Turnover will decrease, lowering ROE
- The Tax Burden will increase, lowering ROE
- The Equity Multiplier will decrease, lowering ROE
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