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(b) Suppose you, a stock analyst, are comparing a discount merchandiser with a high-end merchandiser. Suppose further that both companies have identical ROEs. If you
(b) Suppose you, a stock analyst, are comparing a discount merchandiser with a high-end merchandiser. Suppose further that both companies have identical ROEs. If you apply the DuPont equation to both firms, would you expect the three components to be the same for each company? If not, explain what balance sheet and income statement items might lead to the component differences.
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