For an assignment, I calculated the Return on Equity for a company over the past 5 years.

To make more accurate predictions about long-term future growth, I broke down the ROE into RNOA, FLEV and Spread.

Now I realized that the spread in one of the years is negative (-28.31%), where all other year’s have positive spreads (24.61%, 7.14%, 55.48%).

What does a low and what does a negative spread mean? How do I interpret this?

 

"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"