Balance Sheet Data Cash $900,000 Accounts payable $1,080,000 Accounts receivable 1,800,000 Accruals 360,000 Inventory 2,700,000 Notes payable 1,440,000 Current assets $5,400,000 Current liabilities $2,880,000 Long-term debt 5,310,000 Total liabilities $8,190,000 Common stock 1,102,500 Net fixed assets 7,200,000 Retained earnings 3,307,500 Total equity $4,410,000 Total assets $12,600,000 Total debt and equity $12,600,000 Income Statement Data Sales $18,000,000 Cost of goods sold 10,800,000 Gross profit $7,200,000 Operating expenses 4,500,000 EBIT $2,700,000 Interest expense 810,000 EBT $1,890,000 Taxes 661,500 Net income $1,228,500 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. In the dropdown lists next to your values I'm going to select correct if your calculation is correct and incorrect if your calculation is incorrect. Value Correct/Incorrect Pavo Media Systems Inc. DuPont Analysis Value Correct/Incorrect Ratios Asset management ratio 40.00 Total asset turnover 1.43 Ratios Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) 10.50 9.75 Financial ratios Equity multiplier 21.45 1.54 ASHLEY: 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: Note: Do not round intermediate calculations. Round final answers to the nearest whole number. Value Pavo Media Systems Inc. DuPont Analysis Calculation Numerator Denominator 1 = / 1 Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) Asset management ratio Total asset turnover Financing ratios Equity multiplier / TO / 1 Check all that apply. Increase the efficiency of its assets so that it generates more sales with each dollar of asset investment and increases the company's total asset turnover. Increase the interest rate on its notes payable or long-term debt obligations because it will reduce the company's net profit margin. Use more equity financing in its capital structure, which will increase the equity multiplier. Increase the firm's bottom-line profitability for the same volume of sales, which will increase the company's net profit margin