Analysts and investors often use return on equity (ROE) to compare profitability of a company with other firms in the industry. ROE is considered a very important measure, and managers strive to make the company's ROE numbers look good. If a firm takes steps that increase its expected future ROE, its stock price will increase. Based on your understanding of the uses and limitations of ROE, which of the following projects will a manager likely choose if solely based on the ROE of the next project? Project X, with 35% ROE and a large investment, generating high expected cash flows Project Y, with 40% ROE and a small investment, generating low expected cash flows Suppose you are trying to decide whether to invest in a company that generates a high expected ROE, and you want to conduct further analy the company's performance. If you wanted to conduct a comparative analysis for the current year, you would: Compare the firm's financial ratios for the current year with its ratios in previous years Compare the firm's financial ratios with other firms in the industry for the current year company's likely future financial performance. Consider the scenario and indicate how you would expect the described event or situation to affect the described business organization. Northern Services Inc. low barriers to entry, including few operating licenses or governmental approvals, and small investments in productive equipment facilities. w would you expect this situation to affect the assessment of Northern's financial condition and performance? Its low barriers to entry expose Northern to increased risk of competition, which could negatively affect the predictability of its expected future sales revenues. Although nonquantitative factors may be relevant to a company's financial evaluation in general terms, the details of this specific situatio are not relevant to the firm's financial condition or performance. Its low barriers to entry expose Northern to decreased risk of competition, which could improve the predictability of its expected future sales revenues