Cash Accounts receivable Inventory Current assets $1,200,000 2,400,000 3,600,000 7,200,000 Accounts payable Accruals Notes payable Current liabilities $1,440,000 480,000 1,920,000 3,840,000 5,520,000 9,360,000 1,260,000 3,780,000 5,040,000 $14,400,000 Sales Cost of goods sold Gross profit Operating expenses EBIT Interest expense EBT Long-term debt $24,000,000 14,400,000 9,600,000 6,000,000 3,600,000 892,800 2,707,200 947,520 $1,759,680 Net fixed assets 7,200,000 Total liabilities Common stock Retained earnings Total equity Total debt and equity Taxes Net income Total assets $14,400,000 If I remember correctly, the DuPont equation breaks down our ROE into three component ratios: the turnover ratio, and the , the total 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. I'm going to check the box the side of your calculated value if your calculation is correct and leave it unchecked if your calculation is incorrect. Cepeus Manufacturing Inc. DuPont Analysis Value Correct/Incorrect Value Correct/Incorrect Ratios Profitability ratios Gross profit margin (%) Operating profit margin() Net profit margin (46) Return on equity (%) Ratios Asset management ratio Total assets turnover 1.67 40.00 11.28 12.22 31.43 Financial ratios Equity multiplier 1.54 Numerator Denominator Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) Asset management ratio Total assets tumover Financial 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 Cepeus's ROE. YOU: 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. Decrease the amount of debt financing used by the company, which will decrease the total assets turnover ratio. Increase the cost and amount of assets necessary to generate each dollar of sales because it will increase the company's total assets turnover Decrease the company's use of debt capital because it will decrease 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