Question 2

ABC Corp's ROE has been decreasing over the last five years. How can you use financial statements to find the reason why?

Select an answer:

• Use the statements to find trends, but keep in mind there is usually not a single reason.

• Use recent financial ratios because they will usually provide the reason.

• The reason for a change in performance is almost always revealed in financial statement numbers.

• The historic performance of a company is the best place to find a reason.