Exercise 4 (15 points) Given the following SPM results for three firms: Return on Equity (%) Margin Profit Company Asset Turnover Financial leverare X B 40.0 40.0 40.0 4 6 12 5.0 2.0 2.00 3.33 1.33 2.5 a. Explain how the 40.0% Return on Equity for each company was achieved in terms of the three (SPM) management strategies (Profit Margin, Asset Turnover, Financial Leverage) discussed in the presentation. b. What is the customer Price Elasticity condition faced by each firm and what is the resulting basic business strategy used by each company to achieve the identical Returns on Equity? Explain your answer Company A: Company B Company 6 Exercise 4 (15 points) Given the following SPM results for three firms: Return on Equity (%) Margin Profit Company Asset Turnover Financial leverare X B 40.0 40.0 40.0 4 6 12 5.0 2.0 2.00 3.33 1.33 2.5 a. Explain how the 40.0% Return on Equity for each company was achieved in terms of the three (SPM) management strategies (Profit Margin, Asset Turnover, Financial Leverage) discussed in the presentation. b. What is the customer Price Elasticity condition faced by each firm and what is the resulting basic business strategy used by each company to achieve the identical Returns on Equity? Explain your answer Company A: Company B Company 6