An analysis of company performance using DuPont analysis. If i remember correctly, the DuPont equation breaks down our ROE into three component ratios: the ___

Balance Sheet Data Cach $1,000,000 Accounts payable Accounts receivable 2.000.000 Accruals Inventory 3,000,000 Notes payable Current assets 6,000,000 Current liabilities Long-term debt Total liabilities Common stock Net fixed assets 8,000,000 Retained earnings Total equity Total assets $14,000,000 Total debt and equity $1,200,000 400,000 1,600,000 3,200,000 4,500,000 7,700,000 1.575,000 4,725,000 6,300,000 $14,000,000 Income Statement Data Sales $20.000.000 Cost of goods sold 12,000,000 Gross profit 3,000,000 Operating expenses 5,000,000 EBIT 3,000,000 Interest expense 732.000 EBT 2,268,000 Taxes 567,000 Net income $1,701,000 If I remember correctly, the DuPont equation breaks down our ROE into three component ratios: the turnover ratio, and the the total asset 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 unchecked if your calculation is incorrect. Hydra Cosmetics Inc. DuPont Analysis Value Value Correct/incorrect Ratios Profitability ratios Gross profit margin () Operating profit margin (4) Net profit margin (5) Return on equity (%) Correct/incorrect Ratios Asset management ratio Total assets turnover 40.00 11.34 12.15 31.62 Financial raties Equity multiplier CHLOEI 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 Do not round intermediate calculations and round your final answers up to two decimals. Hydra Cosmetics Inc. DuPont Analysis Calculation Numerator Value Denominator 1 Ratios Profitability ratios Gross profit margin ("%) Operating profit margin (%) Net profit margin (5) Return on equity (%) Asset management ratio Total assets turnover Financial ratios Equity multiplier CHLOE: I see what I did wrong in my computations. Thanks for reviewing these calculations with me. You saved me from a lot of embarrassment Eric would have been very disappointed in me if I had showed him 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? Check all that apply. use more equity financing in its capital structure, which will increase 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. Decrease the company's use of debt capital because it will decrease the equity multiplier Use more debt financing in its capital structure and increase the equity multiplier