Apply both traditional and alternative return on equity decomposition, based on the condensed financial statements produced in requirement 2, and briefly explain the rationale for both methods. Review the traditional decompositions return on assets and financial leverage to illustrate the limitations of this method compared to the alternative decomposition.

\begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ EXHIBIT 5 Summary of Casino's accounting performance between 2017 and 2020} \\ \hline Panel A: ROE decomposition & 2020 & 2019 & 2018 & 2017 \\ \hline NOPAT margin (\%) & 2.7 & 1.9 & 2.1 & 2.5 \\ \hline X Net operating asset turnover & 2.2 & 2.1 & 2.3 & 2.1 \\ \hline= Return on net operating assets (\%) & 6.0 & 4.0 & 4.8 & 5.1 \\ \hline Return on net operating assets (\%) & 6.0 & 4.0 & 4.8 & 5.1 \\ \hline X (Net operating assets/invested capital) & 0.8 & 0.8 & 0.7 & 0.8 \\ \hline + Return on non-operating investments (\%) & 0.9 & 1.0 & 0.6 & 1.2 \\ \hline X (Non-operating investments/invested capital) & 0.3 & 0.3 & 0.3 & 0.2 \\ \hline= Return on invested capital (\%) & 4.7 & 3.3 & 3.8 & 4.3 \\ \hline Spread (\%) & 1.4 & 0.2 & 1.3 & 1.3 \\ \hline X Financial leverage (Debt to Equity) & 2.6 & 2.3 & 1.3 & 1.1 \\ \hline = Financial leverage gain (\%) & 3.7 & 0.5 & 1.7 & 1.5 \\ \hline ROE = Return on invested capital + Financial leverage gain (\%) & 8.4 & 3.7 & 5.4 & 5.7 \\ \hline \end{tabular} Source: Casino's 2017-2020 Annual Reports and author's calculations. The ratios in this table have been calculated (1) using the end-of-year balances ot balance sheet items. (2) alter adjusting the financial statements for off-balance operating lease, and (3) after excluding other income and expense from NOPAT and net income