Hydra Cosmetics Inc. DuPont Analysis Ratios Value Calculation Numerator Denominator Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) Asset management ratio Total assets turnover Financial ratios Equity multiplier CHLOE: I see what I did wrong in my computations. Thanks for reviewing these calculations with me. You saved me from a lot of embarrassment Eric would have been very disappointed in me if I had showed him my original work. So, now let's switch topics and identity 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 strategies should mprove the company's ROE? Check all that apply 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 Thcrease the efficiency of its assets so that it generates more sales with each dollar of asset investment and increases the company's Tecrease the cost and amount of assets necessary to generate each do lar of sales because t will increase the company's total assets Balance Sheet Data Cash Accounts receivable Inventory Current assets $1,000,000 2,000,000 3,000,000 6,000,000 Accounts payable Accruals Notes payable Current liabilities Long-term debt Total liabilities Common stock Retained earnings Total equity Total debt and equity $1,200,000 400,000 1,600,000 3,200,000 4,500,000 7,700,000 1,575,000 4,725,000 6,300,000 $14,000,000 Income Statement Data Sales $20,000,000 Cost of goods sold 12,000,000 Gross profit 8,000,000 Operating expenses 5,000,000 EBIT 3,000,000 Interest expense 732,000 EBT 2,268,000 793,800 Net income $1,474,200 Net fixed assets 8,000,000 Total assets $14,000,000 If I remember correctly, the DuPont equation breaks down our ROE into three component ratios: the turnover ratio, and the equity multiplier , net profit margin the total asset And, according to my understanding of the DuPont equation and its calculation of ROE, the three ratios provide insights into the company's de versus equity financing effectiveness in using the company's assets, and