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Company A has a ROA of 8 % and a ROE of 1 2 % . Company B has a ROA of 7 % and

Company A has a ROA of

8 %

and a ROE of

12 % .

Company B has a ROA of

7 %

and an ROE of

15 % .

What does this tell us about the relative levels of debt financing between these two companies? Which company

s approach is better?

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