Accounts payable $1,440,000 Balance Sheet Data Cash Accounts receivable Inventory Current assets $1,200,000 2,400,000 3,600,000 7,200,000 Accruals Notes payable Current liabilities Long-term debt Income Statement Data Sales $24,000,000 Cost of goods sold 12,000,000 Gross profit 12,000,000 Operating expenses 6,000,000 EBIT 6,000,000 Interest expense 979,200 EBT 5,020,800 Taxes 1,757,280 Net Income $3,263,520 480,000 1,920,000 3,840,000 6,240,000 10,080,000 1,680,000 5,040,000 6,720,000 $16,800,000 Total liabilities Common stock Net fixed assets 9,600,000 Retained earnings Total equity Total debt and equity Total assets $16,800,000 the total asset IF I remember correctly, the DuPont equation breaks down our ROE Into three component ratios: the 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 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 Hydra Cosmetics Inc. DuPont Analysis Ratios Value Correct/Incorrect Ratios Value Correct/Incorrect Asset management ratio Profitability ratios Now, let's see your notes with your ration, 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. Hydro Cosmetics Inc. DuPont Analysis Value Correct/Incorrect Value Correct/Incorrect Ratios Asset management ratio Total assets turnover 50.00 Ratios Profitability ratios Gross profit margin (%) Operating profit margin (9) Net profit margin (%) Return on equity (9) 20.92 19.43 46.40 Financial ratios Equity multiplier 1.67 JASON: 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: Do not round intermediate calculations and round your final answers up to two decimals Hydra Cosmetics Inc. DuPont Analysis Do not round Intermediate calculations and round your final answers up to two decimals, Hydra Cosmetics Inc. DuPont Analysis Value Calculation Numerator Denominator Ratios Profitability ratios Gross profit margin (9) Operating profit margin (%) Net profit margin (%) Return on equity (5) Asset management ratio Total assets turnover Financial ratios Equity multiplier JASON: 1 see what I did wrong in my computations. Thanks for reviewing these calculations with me. You saved me from a lot of embarrassment Anja would have been very disappointed in me if I had showed her my original work. So, now let's switch topics and identity general strategies that could be used to positively affect Hydra'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? embarrassmentira Wola nave been very disappointed in meo showed her my onginar worx So, now let's switch topics and identify general strategies that could be used to positively affect Hydra's ROL. YOU: OK, so given your knowledge of the component ratlos used in the Dupont equation, which of the following strategies should Improve the company's ROE? heck all that apply. Increase the interest rate an Its notes payable or fong-term debt obilgations because it will reduce the company's net profit margin. Decrease the company's use of debt capital because it will decrease the equity multiplier. Increase the efficiency of its assets so that it generates more sales with each dollar of asset investment and increases the company's total assets turnover. 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. JASON: 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