Assignment: Ch. 4 Tying the Ratios Together The DuPont equation shows the relationships among asset management, debt management, and ratios. Management can use the DuPont equation to analyze ways of improving the firm's performance. Its equation is: Ratio analysis is important to understand and interpret financial statements; however, sound financial analysis involves more than just calculating and interpreting numbers. factors also need to be considered. Quantitative Problem: Rosnan Industries' 2014 and 2013 balance sheets and income statements are shown below Balance Sheets: 014 Cash and equivalens Accounts receivable otall current assts Net plant and oquipmen Total asscts Accounts payable $150 585 Notes payable Total curent liabilities Long-lerm debt Retained carnings Total liabilities and equity 225 1.225 Income Statements Oprating costs escluding daprocition Tates (40%) Dividends paid Addition to retained carmings Shares outstanding $25.00 $2250