Last year Bania Inc. had $350,000 of assets, $23,750 of net income, and a debt ratio of 35%. Now suppose the new CFO convinces the president to increase the debt ratio to 60%. Sales and total assets will not be affected, but interest expenses would increase. However, the CFO believes that better cost controls would be sufficient to offset the higher interest expense and thus keep net income unchanged. By how much would the change in the capital structure improve the ROE? The Du Pont equation enables financial analysts the ability to evaluate the interaction of basic profitability, the efficient use of resources, and the degree to which the company uses debt financing