A decomposition of ROE for Integra SA is as follows: FY12 FY11 ROE 18.90% 18.90% Tax burden

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A decomposition of ROE for Integra SA is as follows:

FY12 FY11 ROE 18.90% 18.90%

Tax burden 0.70 0.75 Interest burden 0.90 0.90 EBIT margin 10.00% 10.00%

Asset turnover 1.50 1.40 Leverage 2.00 2.00 Which of the following choices best describes reasonable conclusions an analyst might make based on this ROE decomposition?

A . Profi tability and the liquidity position both improved in FY12.

B . Th e higher average tax rate in FY12 off set the improvement in profi tability, leaving ROE unchanged.

C . Th e higher average tax rate in FY12 off set the improvement in effi ciency, leaving ROE unchanged.

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