A) Combine the information from the balance sheet with the income statement to derive Return on Equity for 2011, 2012 and 2013. Use year-end equity as your denominator.

B) Decompose return on equity in measures of profitability, asset turnover and leverage (traditional decomposition). What explains the change in return on equity for Prada between 2011, 2012 and 2013? Motivate your answer.

C) Assume that Prada does not generate any interest income on its cash and cash equivalents. How would returning all Cash and cash equivalents to shareholders impact Return on Equity? Motivate your answer.

Please find below summarized income statement and balance sheet for luxury company Prada. 2011 2012 504 Balance Sheet (EUR m) Goodwill Intangible assets Property, plant and equipment Cash and cash equivalents Total assets 359 714 362 504 375 857 2013 504 398 1.230 568 3.888 572 2.944 3-385 1.831 Equity Total equity and liabilities 2.330 3.385 2.702 3.888 2.944 2011 2012 3.297 -921 2.556 -728 1.828 -1.096 -103 629 2.377 -1.375 Income statement (EUR m) Revenues Cost of sales Gross profit Selling, Marketing and administrative expenses Other income and expenses Operating income Net financial income (expense) Pre-tax income Income tax expense Net income Dividend 2013 3.587 -939 2.649 -1.580 -130 939 -16 -111 890 -6 -26 884 603 -166 436 -250 633 923 -285 638 111 118 129 A. (2p.) Combine the information from the balance sheet with the income statement to derive Return on Equity for 2011, 2012 and 2013. Use year-end equity as your denominator