9. An analysis of company performance using DuPont analysis Walking down the hall of your office bullding with a sheaf of papers in his hand, your friend and colleague, Landon, stepped into your office and asked the following. LANDON! Do you have 10 or 15 minutes that you can spare? You: Sure, Tye got a meeting in an hour, but I don't want to start something new and then be internoted by the meeting, so how can I help? LANDON: I've been reviewing the compory's financial statements and looking for general ways to improve our performance, in general, and the company's return on equity, or ROE, in particular. Amelia, my new team leader, suggested that I start by using b Dupont analysis, and I'd like to run my numbecs and conclusions by you, to see if tive missed anything. Here are the balance sheet and income statement data that Amelia gave mo, and here are my notes with my calculations. Could you start by making sure that my numbers are correct?. Youl Give me a minute to look at these financial statements and to remember what I know about the Dufont analysis, If 1 remember correctly, the Dupont equation breaks down our return on equity (ROE) into three component ratios: the the ratio, and the And. accordina to my understanding of the Dupont equation and its calculation of ROE, the three ratios provide insights into the company's . effectiveness in using the company's assets, and Now, let's see your notes with your ratios, and then we can talk about possible strategles that will improve the ratios. the foliowing table, select whether each of the ratios is correct or incorrect. Canis Major Veterinary Supplies Inc.DuPont An LANDON: OK, it looks like l've got a couple of incorrect values, so show me your calculations, and then we can talk strategies for improvement. you: 1've just made rough calculations, so let me complete this table by inputting the components of each ratio and its value: Note: Do not round intermediate calculations for this part. LANDON: I see what I did wrong in my computations. Thanks for reviewing these calculations with me. You saved me from a lot of embarrassmenti Amelia would have been very disappointed in me if I had her showed my original work. So, now let's switch topics and identify general strategies that could be used to positively affect Canis Major's ROE. YOU: OK, so given your knowledge of the component ratios used in the Dupont equation, which of the following strategles should improve the company's ROE? Check all that apply. Increase the interest rate on its notes payable or long-term debt obligations because it will reduce the company's net profit margin. Reduce the company's operating expenses, its cost of goods sold, and/or the interest rate on its borrowed funds because this will increase the company's net profit margin. Decrease the company's use of debt capital because it will decrease the equity multiplier. Increase the firri's bckom-line profitability for the same volume of sales, which will increase the company's net profit margin. LANDON: 1 think 1 understand now. Thanks for taking the time to go ever this with me, and let me know when 1 can return the favor