How can increase the profit margin, Financial Accounting

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How can increase the profit margin

Response to the following problem:

The Board of Directors of Collins Entertainment, Inc. has been pressuring its CEO to boost ROE. During a recent interview on CNBC, he announces his plan to improve the firm's financial performance. He will raise prices on all of the company's products by 10 percent. He justifies the plan by observing that ROE can be decomposed into the product of profit margin, asset turnover, and financial leverage. By raising prices, he will increase the profit margin and thus ROE.

Does this plan make sense to you? Why or why not?

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Financial Accounting: How can increase the profit margin

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Financial Accounting: How can increase the profit margin

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