If Smith Pharmaceuticals has a $15\%$ return on equity $($ROE$),$ what do you need to know to determine if it has a competitive advantage?

It must be compared to the ROE of the competitors in the industry.

Nothing, $15\%$ is a terrific return for the shareholders.

It must be determined by comparing it to the history of the firm's ROE over a number of years.

It must be evaluated for depreciation of the capital.