Hydra Cosmetics Inc. DuPont Analysis LANDON: OK, it looks like IVve got a couple of incorrect values, so show me your calculations, and then we can talk strategies for improvement. You: Tve just made rough calculations, so let me complete this table by inputting the components of each ratio and its value: Do not round intermediate calculations and round your final answers up to two decimals. 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 obout possible strategles that will improve the ratios, 1 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 LANDON: Do you have 10 or 15 minutes that you can spare? YoU: Sure, t'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 1 help? LANDON: I've been reviewing the company's financial statements and looking for ways to improve our performance, in general, and the company's return on equity, or ROE, in particular. Amelia, my new team leader, suggested that 1 start by using a Dupont analysis, and t'd tike to run my numbers and conclusions by you to see whether I've missed anything. Here are the balance sheet and income statement data that Amelia gave me, and here are my notes with my calculations. Could you start by making sure that my numbers are correct? You: Give me a minute to look at these financial staternents and to remember what t know about the Dupont analysis. Hydra Cosmetics Inc. DuPont Analysis LANDON: 1 see what 1 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 t had showed her my original work. So, now let's swikch topics and identify general strategies that could be used to positively affect Hydra's ROE: YOU: OK, so given your knowledge of the component ratios used in the DuPont equation, which of the following strategles should improve the company's ROE? 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 assets turnover: Increase the cost and amount of assets necessary to generate each dollar of sales because it will increase the company's total assets turnover: Increase the interest rate on its notes payable or long-term debt obligations because it will reduce the company's net profit margin. Increase the firm's bottom-line profitability for the same volume of sales, which will increase the company's net profit margin. LANDON: I think I understand now. Thanks for taking the time to go over this with me, and let me know when 1 can return the favor