Galaxy Ltd has achieved a return on assets (ROA) of 5%. It pays an average of 6% interest on its debt. It has increased its debt ratio from 30% to 38% over the past year, this increase would have the following effect on the return on equity (ROE)

Select one:

a.An improvement in the ROE

b.A worsening of the ROE

c.Neither a favourable or unfavourable effect

d.Cannot be determined