A company’s return on capital employed fell from 15% in the previous year to 10% in the current year. During the current year, the directors observed these changes. 1. New debentures were issued to finance a large investment in non-current assets. 2. Current liabilities rose. 3. The expenses-to-revenue ratio went up. 4. The interest rate on the company’s large overdraft rose. Which of these changes could account for the fall in return on capital employed?
- A1 and 2
- B1 and 3
- C2 and 4
- D3 and 4