Corporate issuers los 22

Pls elaborate what is it that u want or what is ur query

Sriram Somayajula

Admin

11-Jan-24 22:04

Sir, I want this illustrations explained.

Thread Starter

Swetha Saravanan

CFA L1

★ 0

11-Jan-24 22:08

First one When instead of buying a machine at full equity , it is purchased at 50:50 DE, then ROE increase because Debt return is fixed at a lower rate and as profits increase, all teh increase in profit goes to equity because of which ROE increases Second one On the flip side, if profits decrease, most of the profit does towards paying interest on debt because of which very little is left for Equity holders because of which ROE decreases. Have you understood both the above points i am making above or not? If not let me know if i can call you at 9.30 Am and explain this in detail

Sriram Somayajula

Admin

11-Jan-24 22:19