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Hi Thom,

A useful way of thinking about ROE is in terms of a Dupont Analysis:

ROE = Net Margin * Asset Turnover * Financial Leverage

FAST is attractive, compared to other firms, because it earns a relative high net margin, high asset turnover and uses modest financial leverage.

Comparing two different companies using these 3 components to ROE allows an investor to "see" just how they earn their profits. If 2 companies earn identical ROE, the one with the lower financial leverage would be more desirable (less debt = less risk).

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