DuPont equation: Carter, Inc., a manufacturer of electrical supplies, has an ROE of 23.1 percent, a profit margin of 4.9 percent, and a total asset turnover ratio of 2.6 times. Its peer group also has an ROE of 23.1 percent, but has outperformed Carter with a net profit margin of 5.3 percent and a total asset turnover ratio of 3.0 times.

Explain how Carter managed to achieve the same level of profitability as reflected by the ROE.