Cash $700,000 Accounts payable $840,000 Sales $14,000,000 Accounts receivable 1,400,000 Accruals 280,000 Cost of goods sold 7,000,000 Inventory 2,100,000 Notes payable 1,120,000 Gross profit $7,000,000 Current assets $4,200,000 Current liabilities $2,240,000 Operating expenses 3,500,000 Long-term debt 3,640,000 EBIT $3,500,000 Total liabilities $5,880,000 Interest expense 571,200 Common stock 980,000 EBT $2,928,800 Net fixed assets 5,600,000 Retained earnings 2,940,000 Taxes 1,025,080 Total equity $3,920,000 Net income $1,903,720 Total assets $9,800,000 Total debt and equity $9,800,000 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 If I remember correctly, the DuPont equation breaks down our ROE into three component ratios: the the total asset 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. Hydra Cosmetics Inc. DuPont Analysis Correct/Incorrect Ratios Ratios Value Value Correct/Incorrect Profitability ratios Asset management ratio 50.00 Total asset turnover 1.43 20.92 Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) 19.43 Financial ratios 46.35 Equity multiplier 1.67 Calculation Value Profitability ratios Numerator Denominator = Gross profit margin (%) Operating profit margin (%) Net profit margin (%) = Return on equity (%) = Asset management ratio Total asset turnover Financing ratios Equity multiplier LANDON: I see what I did wrong in my computations. Thanks for reviewing these calculations with me. You saved me from a lot of embarrassment! Amelia 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. Check all that apply. 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. U Use more debt financing in its capital structure and 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 asset turnover. LANDON: I think I understand now. Thanks for taking the time to go over this with me, and let me know when I can return the favor