1) Break down Alcoa's ROE by quarter for 2006 and 2007. In which direction do you see the company's performance moving? What other information would you like to see (be specific)?Answer:ROE is the return on equity which is determined using the formula of net income divided by total shareholders' equity. This calculation is essential in order to understand whether there is an improvement or reduction in the return on investment for ordinary shareholders. In this case, from the calculation below, it is clear that there is only a slight improvement in ROE for 2007 compared to 2006. ROE Calculation: (in millions of dollars) 2006 2007 Result consolidated net I $2,248 $2,564 Total shareholders' equity II $14,631 $16,061 ROE III =I/II 15.36% 15.96%ROE breaking down: ROE = Net profit margin * Asset turnover rate * Leverage financial. Net Profit Margin = Net Profit/SalesAsset Turnover Ratio = Sales/Total AssetsFinancial Leverage = Total Assets/Total Equity (in millions of dollars) 2006 2007 % changeSales $30,379 $30,748 1.21%Net Profit 2,248 $2,564 $14.06%Net profit margin 7.40% 8.34% 0.94%Total assets $37,183 $38,803 4.36%Asset turnover ratio 0.8170132 0.792 413 -2.46% Equity $14,631 $16,016 9.47%Financial leverage 2.5413847 2.4227647 -11.86%ROE 15.36% 16.01% 0.64%From the above breakdown of ROE, it is clear that there is only a slight improvement in sales but the improvement in the bottom line is more significant, which indicates an improvement in the profitability of the company. The overall net profit margin increased by 0.94%, which is a positive indication of the company's financial performance. There is an increase in the paper medium...Similarly, new entrants are entering the market with green technology, making new players more competent. The economic downturn also has a direct impact on the business as aerospace and government contracts are primarily influenced by these factors. Many competitors expanding into the market do not use the same quality as Alcoa, resulting in cheap imports, which creates tougher competition. Higher investments in technology and operational efficiencies add additional pressure on the business, as well as energy cost. Similarly, unfavorable currency movement creates more problems for the company. Alcoa is present in more countries which create more currency problems. They have a versatile customer base, the change in specifications and business strategy of these companies creates more difficulties for the company..