QUESTION: Referring to the CFM Majestic financial statements, did ROE rise or fall from Year 1 to Year 2?

Balance Sheet

CFM Majestic Inc.

Years 1 & 2 ($000,000s)

	Year 1	Year 2
Cash	29.2	21.2
A/R	108.2	122.6
Inventory	74.0	79.7
Total Current Assets	211.4	223.5
Fixed Assets, Net	81.6	94.1
Goodwill	159.6	184.5
Total Assets	452.6	502.1
Accounts Payable	46.4	50.5
Short-term Debt	23.0	27.0
Total Current Liabilities	69.4	77.5
Long Term Debt	125.8	128.5
Deferred income taxes	14.0	18.6
Equity
Share Capital	148.9	151.8
Retained Earnings	94.5	125.7
Owners' Equity	243.4	277.5
Total Liabilities & Equity	452.6	502.1

Income Statement

CFM Majestic Inc.

Years 1 & 2 ($000,000s)

	Year 1	Year 2
Sales	381.9	416.3
COGS	244.9	278.9
SG&A	59.7	63.8
Depreciation	13.8	15.4
R & D	5.3	4.3
EBIT	58.2	53.9
Interest Expense	7.3	7.9
Earnings before Income Tax	50.9	46.0
Income Taxes	17.3	14.8
Net Income	33.6	31.2