A sheaf of papers in his hand, your friend and colleague, Akira, steps into your office and asked the following.

AKIRA: Do you have 10 or 15 minutes that you can spare?

YOU: Sure, Ive got a meeting in an hour, but I dont want to start something new and then be interrupted by the meeting, so how can I help?

AKIRA: Ive been reviewing the companys financial statements and looking for ways to improve our performance, in general, and the companys return on equity, or ROE, in particular. Emma, my new team leader, suggested that I start by using a DuPont analysis, and Id like to run my numbers and conclusions by you to see whether Ive missed anything.

Here are the balance sheet and income statement data that Emma 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.

If I remember correctly, the DuPont equation breaks down our ROE into three component ratios: the , the total asset turnover ratio, and 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 control over its expenses the side of your calculated value if your calculation is correct and leave it unchecked if your calculation is incorrect. AKIRA: I see what I did wrong in my computations. Thanks for reviewing these calculations with me. You saved me from a lot of embarrassment! Emma would have been very disappointed in me if I had showed her 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 strategies should improve the company's ROE? Check all that apply. Use more equity financing in its capital structure, which will increase the equity multiplier. Increase the firm's bottom-line profitability for the same volume of sales, which will increase the company's net profit margin. Use more debt financing in its capital structure and increase the equity multiplier. Decrease the company's use of debt capital because it will decrease the equity multiplier. AKIRA: I think I understand now. Thanks for taking the time to go over this with me, and let me know when I can return the favor