Which one of the following changes will provide an increase

Which one of the following changes will provide an increase in a firm\'s ROE?

a. a decrease in profit margin

b. an increase in interest rate

c. an increase in equity

d. a decrease in tax rate

Solution

(D)Solution:- ROE=Net income/shareholders equity

If tax rate decreases, profits available for equity shareholders get increases thereby ROE of a company get also increases.

Whereas other mentioned cases results in decrease in ROE