Star Inc has year 1 revenues of $80 million net income of $9 million a


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Star Inc has year 1 revenues of $80 million net income of $9 million assets of $65 million and equity of $40 million as well as year 2 revenues of $87 million

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Star Inc has year 1 revenues of $80 million net income of $9 million

assets of $65 million and equity of $40 million as well as year 2 revenues of $87 million, net income of $22 million, assets of $70 million, and equity of $50 million. Calculate Star's return on equity (ROE) for each year based on the DuPont method and compare it with a direct ROE measure. Next, explain why the firm's ROE changed between year 1 and year 2.

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