Use the following ratio information derived from Carlisle Companys financial statements (these financial statements along with the definitions of the ratios noted below are in the second document provided for this exam) to answer questions (A) - (F):

Ratios for Carlisle Company	2014	2013
Asset Turnover Ratio	0.8	0.8
Capital Structure Leverage	9.8	5.5
Current Ratio	1.25	1.28
Days in A/c Payable	54	55
Days in A/c Receivable	125	118
Days in Inventory	17	17
Debt to Equity Ratio	8.8	4.5
Interest Coverage Ratio	34.6	50.4
Inventory Turnover Ratio	22	22
Payables Turnover Ratio	6.8	6.7
Profit Margin Ratio	13.0%	16.7%
Quick Ratio	1.0	1.1
Receivables Turnover Ratio	2.9	3.1
Return on Assets	10.2%	13.1%
Return on Equity (ROE)	100%	72%

(A)Management at the Company has noticed that the companys return on equity has increased in the past They have hired you as a consultant,to provide detailed insight on the following questions:

What factor was the primary cause of the increase in ROE? (.5 pt)

What was the primary factor that curtailed this increase in ROE? (.5 pt)

(B)What was the single largest item driving the change in profit margin ratio 2013 to 2014? (.5pt)

(C)In 2014,did Carilisle Companys shareholders from the companys use of debt financing?Yes/No What is your evidence? (.5pt)

(D)As a potential lender to Carlisle Company,what key ratios would you consider in making your decision to lend to the Company in 2015,and how would they affect your decision? ( 1pt)

(E)Based on what you see in the financial statements,how would you classify the cost behavior of the Selling, General and Administrative cost primarily fixed or primarily variable?What is your evidence? (1 pt)

(F) Identify the three changes in the balance sheet that have most significantly driven the increase in the capital structure leverage (aka leverage or financial leverage) ratio. Explain your answers. (1pt)