and, according to my understanding of the Dupoint equation the calculation of ROE, the three ratios provide insights into the companys (use of debt versus equity financing/management of its sales and share price), effectiveness in hsing the companys assets, and (control over its expenses/management of its revenues and depreciation methods).

could you please answer the question pictured.

You Give me a minute to look at these financial statements and to remember what 1 know about the DuPont analysis 1,800,000 Sales ,000,000 Accruah 000,000ER Total labilnies ,800,000 EBT ,400,000 Taxes 2.272,200 Total equity 4,219,800 Total debt and eouity $18,000,000 $18,000,000 remember correctly, the DuPont equation breaks down our RDE into three component ratios the the total asset turnover ratio, and the And, acconding to my understanding of the DuPont equation and its calcu ation of ROE, the three ratios provide insight to the companys effedtivenes in using the compary's assets, and Nom, let's see your notes with your eatios, and then we can talk about possible strategies that will improve the ratios. Im going to check the box to the side of your caloulated value if your calculation is cornect and leeve iet unchecked if your Hydra Cosmetics Inc. DuPont Analysis Check if Check if Correct 1.64 Pinancing ratios Equity mt ple Akira ow, looks lke I've got a couple of inoomect values, so show me your calouations, and then we can and ts o let mne complete this table by inputting the taking the time s 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? kira I've been reviewing the company's financial statements and looking for general ways to improve our performance, in general, and the company's return on equity, or ROE, in particular. Emma, 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 if I've 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? Give me a minute to look at these financial statements and to remember what I know about the DuPont analysis. You Balance Sheet Data Income Statement Data $1,500,000 Accounts payable $1,800,000 Sales $30,000,000 Cash 3,000,000 Accruals 600,000 Cost of goods sold 15,000,000 Accounts receivable 4,500,000 Notes payable 2,400,000 Gross profit Inventory 15,000,000 Current liabilities 9,000,000 4,800,000 Operating expenses 7,500,000 Current assets Long-term debt 6,000,000 EBIT 7,500,000 Total liabilities 10,800,000 Interest expense 1,008,000 Common stock 1,800,000 EBT 6,492,000 Net fixed assets 9,000,000 Retained earnings 5,400,000 Taxes 2,272,200 Total equity 7,200,000 Net income $4,219,800 Total assets $18,000,000 Total debt and equity $18,000,000 If 1 remember correctly, the DuPont equation breaks down our ROE into three component ratios: the If I remember correctly, the DuPont equation breaks down our ROE into three component ratios: the net profit marginthe total asset turnover ratio, and the equity multiplier And, according to my understanding of the DuPont equation and its calculation of ROE, the three ratios provide insights , effectiveness in using the company's assets, and into the company's 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 Check if Check if Value Correct Value Correct Ratios Ratios Asset management ratio Profitability ratios 50.00 1.67 Total asset turnover Gross profit margin (%) 21.64 Operating profit margin (%) Financing ratios 23.44 Net profit margin (%) Equity multiplier 1.67 65.37 Return on equity (%) OK, it looks like I've got a couple of incorrect values, so show me your calculations, and then we can talk strategies for Akira improvement. You I've just made rough ca culations, so let me complete this table by inputting the components of each ratio and its value Hydra Cosmetics Inc. DuPont Analysis Value Calculation Ratios Denominator Numerator Profitability ratios Hydra Cosmetics Inc. DuPont Analysis Value Calculation Ratios Denominator Numerator Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) Asset management ratio Total asset turnover Financing ratios Equity multiplier 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 Hydra's ROE. 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.) Increase the cost and amount of assets necessary to generate each dollar of sales because it will increase the company's total sset 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. 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