A sheaf of papers in his hand, your friend and colleague, Alex, steps into your office and asked the following. Alex 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? Alex 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. Mia, 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 Mia 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 DuPont analysis. Balance Sheet Data Income Statement Data Cash Accounts payable Sales Accounts receivable $1,500,000 3,000,000 4,500,000 9,000,000 Inventory Current assets Accruals Notes payable Current liabilities Cost of goods sold Gross profit Operating expenses EBIT Long-term debt $1,800,000 600,000 2,400,000 4,800,000 6,900,000 11,700,000 1,575,000 4,725,000 6,300,000 $18,000,000 $30,000,000 15,000,000 15,000,000 7,500,000 7,500,000 1,116,000 6,384,000 2,234,400 $4,149,600 Total liabilities Interest expense Common stock EBT Net fixed assets 9,000,000 Taxes Retained earnings Total equity Total debt and equity Net income Total assets $18,000,000 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 incorrect. Cepeus Manufacturing Inc. DuPont Analysis Check if Correct Ratios Check if Correct Value Value Asset management ratio Total asset turnover 50.00 1.67 0 Ratios Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) 21.28 23.05 O Financing ratios Equity multiplier 59.28 1.54 Alex OK, it looks like I'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: Cepeus Manufacturing Inc. DuPont Analysis Calculation Numerator Denominator Value / / / Ratios Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) Asset management ratio Total asset turnover Financing ratios Equity multiplier / /