This year Baldwin achieved an ROE of 31

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This year Baldwin achieved an ROE of 31.7%. Suppose next year the profit margin (Net Income/Sales) increases. Assuming sales, assets and financial leverage remain the same next year, what effect would you expect this action to have on Baldwin's ROE?

Select : 1

1) Baldwin ROE will remain the same.

2) Baldwin ROE will increase.

3) Baldwin ROE will decrease.