A sheaf of papers in her hand, your friend and colleague, Chloe, steps into your office and asked the fallowing CHLOE: Do you have 10 or 15 minutes that you can spare? YOU: Sure, I've got a meeting in an hour, but I don't want to start something new and then be interrupted by the meeting, so how can I help? CHLOE: I've been reviewing the company's financial statements and looking for ways to improve our performance, in general, and the company's return on equity, or ROE, in particular. Eric, my new team leader, suggested that I start by using a DuPont analysis, and I'd like to run my numbers and conclusions by you to see whether I've missed anything. Here are the balance sheet and income statement data that Eric gave me, and here are my notes with my calculations. Could you start by making sure that my numbers are correct? YOU: Give me a minute to look at these financial statements and to remember what I know about the DuPant analysis Balance Sheet Data Income Statement Data 51,200,000 $1,000,000 Cash Accounts Sales $20,000,000 payable uals Accounts 2,000,000 400,000 Cost of 12,000,000 receivable Inventory goods sold Gross profit 8,000,000 3,000,000 Notes 1,600,000 ayable Current Operating expenses T 5,000,000 Current 6,000,000 3,200,000 liabilities assets Long-term debt 4,500,000 3,000,000 7,700,000 Total Interest 732,000 liabilities nse 2,258,000 Common 1,575,000 T stock Net fixed 8,000,000 Retained 4,725,000 es 793,800 Balance Sheet Data Income Statement Data $20,000,000 Cash $1,000,000 Accounts s1, 200,000 Sales payable Accruals 2,000,000 Cost of Accounts 400,000 12,000,000 goods sold Gross profit 8.000,000 receivable 1,600,000 Inventory 3,000,000 Notes yable Current liabilities Current Operating 6,000,000 3,200,000 5,000,000 assets expenses Long-term debt 4,500.p00 EBIT 3,000,000 7,700,000 Total Interest 732,000 liabilities expense T 1,575,000 Common 2,268,000 stock 8,000,000 Retained earnings Total equity $14,000,000 Total debt and equity 4,725,000 Net fixed Taxes 793,800 assets 6,300,000 14,000,000 Net income $1,474,200 Total assets If I remember correctly, the DuPont equation breaks down our ROE into three component ratios: the total asset tumover ratio, and the the And, according 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 strategies that will improve the ratios. I'm going to check the box to the side of your calculated value if your calculation is correct and leave it unchecked if your calculation is incorect. Hydra Cosmetics Inc. DuPont Analysis Value Correct/Incorrect Ratlos Value Correct/Incorrect Ratios Profitability ratlos Asset management ratio Total assets Gross profit margin () Operating profit margin (%) 40.00 1.43 tumover 11.34 Correct/Incorrect Ratios Value Correct/Incorrect Ratios Value Profitability Asset ratios management ratio Grass profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) Total assets 40.00 1.43 tumover 11.34 10.53 Financial ratlos 27.41 Equity multiplier 1.82 CHLOE: OK, it looks like T've got a couple of incorrect values, so show me your calculations, and then we can talk strategies for improvement YOU: I've just made rough calculations, so let me complete this table by inputting the components of each ratio and its value: Do not round intermediate calculations and round your final answers up to two decimals. Hydra Cosmetics Inc. DuPont Analysis Ratios Profitablility ratios Gross profit margin (%) Calculation Value Denominator Numerator - Operating profit margin (%) Net profit margin (% ) Return on equity (%) Asset management ratio Total assets turnover Financial ratios Equity multiplier