This question has two parts

Part 1

Conduct a three-stage ROE Decomposition for this company.

Return on Equity (ROE) .12

Dividends: $288

Accounts Payable: $900

Average Days Payable: 33

Total Liabilities: $5,000

Retention Ratio: 0.60

Profit Margin: .05

Tax Rate: .24

Part 2

The comment is made, "Because increasing the equity multiplier will increase the return on equity (ROE), the company should attempt to maximize its equity multiplier." Explain whether you agree or disagree.