Compute ROA, ROE and ROFL and Interpret the Effects of Leverage Basic income statement and balance sheet information is given below for six different cases. For each case, the assets are financed with a mix of non-interest-bearing liabilities, 10% interest-bearing liability and stockholders equity.

Case	A	B	C	D	E	F
Average assets	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000
Non-interest bearing liabilities	0	0	0	0	200	200
Interest-bearing liabilities	0	250	500	500	0	300
Average shareholders' equity	1,000	750	500	500	800	500
Earnings before interest and taxes (EBIT)	120	120	120	80	100	80

a. For each case, calculate the return on equity (ROE), return on assets (ROA) and return on financial leverage (ROFL). In all cases, the income tax rate is 40%. Round answers to one decimal place (i.e., 0.2567 = 25.7%). Use negative signs with answers, when appropriate.

	ROE	ROA	ROFL
A	Answer	Answer	Answer
B	Answer	Answer	Answer
C	Answer	Answer	Answer
D	Answer	Answer	Answer
E	Answer	Answer	Answer
F	Answer	Answer	Answer

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