Analysis of Financial Statements: Tying the Ratios Together The DuPont equation shows the relationships among asset management, debt management, and analyze ways of improving the firm's performance. Its equation is ratios. Management can use the DuPont equation to -Select- ROE Profit margin x Total assets turnover x Equity multiplier Ratio analysis is important to understand and interpret financial statements; however, sound financial analysis involves more than just calculating and interpreting numbers.Select- factors also need to be considered. Quantitative Problem: Rosnan Industries' 2018 and 2017 balance sheets and income statements are shown below. Balance Sheets: 2018 2017 Cash and equivalents $70 $55 Accounts receivable 275 300 Inventories 375 350 Total current assets $720 $705 Net plant and equipment 2,000 1,490 Total assets $2,720 $2,195 Accounts payable $150 $85 Accruals 75 50 Notes payable 120 Total current liabilities $345 $280 450 290 Long-term debt Common stock 1,225 1,225 Retained earnings 700 400 Total liabilities and equity $2,720 $2,195 Income Statements: 2018 2017 $1,500 Sales $2,000 Operating costs excluding depreciation 1,250 1,000 EBITDA $750 $500 Depreciation and amortization 100 75 $650 $425 BIT 62 45 Interest $588 $380 T Taxes (40%) 235 152 $228 Net income $353 Dividends paid $53 $48 Addition to retained earnings $300 $180 Shares outstanding 100 100 $25.00 $22.50 Price WACC 10.00% What is the firm's 2018 current ratio? Round your answer to two decimal places. If the industry average debt-to-total-assets ratio is 30%, then Rosnan's creditors have a -Select-cushion than indicated by the industry average. What is the firm's 2018 net profit margin? Round your answer to four decimal places. If the industry average profit margin is 12%, then Rosnan's lower than average debt-to-total-assets ratio might be one reason for its high profit margin. -Select- What is the firm's 2018 price/earnings ratio? Round your answer to two decimal places Using the DuPont equation, what is the firm's 2018 ROE? Round your answer to two decimal places. %