Income Statement Data Cash $20,000,000 balance sheet Data $1,000,000 Accounts payable 2,000,000 Accruals 3,000,000 Notes payable $6,000,000 Current liabilities $1,200,000 400,000 Accounts receivable 12,000,000 1,600,000 Inventory Current assets $3,200,000 Sales Cost of goods sold Gross profit Operating expenses EBIT Interest expense EBT Long-term debt $8,000,000 5,000,000 $3,000,000 732,000 $2,268,000 4,500,000 $7,700,000 1,575,000 Total liabilities Common stock Net fixed assets 8,000,000 Retained earnings 4,725,000 Taxes 793,800 Net income $1,474,200 Total equity Total debt and equity $6,300,000 $14,000,000 Total assets $14,000,000 the tot If I remember correctly, the DuPont equation breaks down our ROE into three component ratios: the net profit margin tumover ratio, and the c ity And, according to my understanding of the DuPont equation and its calculation of ROE, the three ratios provide insights into the company's managements Price effectiveness in using the company's assets, and in t h Now let's see your votes with your ratios, and then we can talk about possible strategies that wi Your values I'm going to select correct if your calculations correct and incorrect your calculation Hydra Cosmetics Inc. DuPont Analysis Calculation Numerator Denominator Value Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) Asset management ratio Total asset turnover Financing 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 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 CHLOE! I see what I did wrong in my computations. Thanks for reviewing these calculations with me. You saved me from a lot 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 improve the company's ROE? Check all that apply. Decrease the company's use of debt capital because it will decrease the equity multiplier Decrease the amount of debt financing used by the company, which will decrease the total asset turnover ratio. Increase the efficiency of its assets so that it generates more sales with each dollar of asset investment and increases the com 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 mag improve the company's ROE? Check all that apply. Decrease the company's use of debt capital because it will decrease the equity multiplier. Decrease the amount of debt financing used by the company, which will decrease the total asset turnover ratio. 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. CHLOE: 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