11. Below are three relationships that are important to the determination of profitability. Assume assets were $22,900,000 on Dec. 31, 2008. 1. Operating leverage = Earnings before interest but after taxes Average assets. 2. Financial structure leverage = Net income available to common shareholders Earnings before interest but after taxes 3. ROCE = ROA Common earnings leverage Financial structure leverage REQUIRED: Compute the operating leverage, financial structure leverage, and ROCE (rounded to two places). Then use these relationships to analyze how the profitability of X-Mart changed over the three year period below. What does the company need to do to reverse this trend? What are the risks of your strategy? As of Dec. 31 2009 2010 2011 ROA 0.10 Assets $27,500,000 0.10 $23,000,000 0.08 $27,600,000 Net income available to common $67,250,000 shareholders $68,960,210 $70,910,840 Earnings after taxes but before $25,000,000 $24,541,000 $24,794,000 interest