A financial analyst for Win Capital Investments Pty Ltd, a diversified investment fund, has gathered the following information for the years 2016 and 2017 on two companies A and B that it is considering adding to its portfolio. Of particular concern are the operating and financial risks of each company:

	2016		2017
	Company A	Company B	Company A	Company B
sales	10.7	13.9	11.6	14.6
EBIT	5.7	7.4	6.2	8.1
Assets	10.7	15.6
Debt	5.8	9.3
Interest	0.6	1
Equity	4.9	6.3

Use the data from the above table to assess the operating leverage of each company (use 2016 as the point of reference). Which company has more operating leverage? II. Assess the ROE (cash to equity/ordinary shares equity) of the two companies by using the data provided. III. Assume Return on Assets for Company A is 10% and for Company B is 20%. Which company has more financial leverage? IV. Use your findings in parts (I), (II) and (III) to company