Page 75 - FINAL CFA I SLIDES JUNE 2019 DAY 7
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Session Unit 7:
27. Financial Analysis Techniques
tanties
Company B has a higher tax burden but a lower interest
burden (a lower ratio indicates a higher burden).
Company B has better EBIT margins and better asset
utilization (perhaps management of inventory,
receivables, or payables, or a lower cost basis in its fixed
assets due to their age), and less leverage. Its higher
EBIT margins and asset turnover are the main factors
leading to its significantly higher ROE, which it achieves
with less leverage than Company A.
(
