2.

a) One of the fastest growing industries in the last 20 years is fast food industry. Yet the average profitability of the Industry has been very low.

Using the industry analysis framework, list all potential factors that might explain this apparent contradiction.

b) What is ROE and what implication does it have on the overall performance of the firm? By using various inputs, prove that:Net Financial Leverage=(ROE-Operating ROA)/ Spread