Please show your work and write solutions in details, including formulas and how you plug numbers, given in each question, into these formulas. Please write short verbal conclusion at the end summarizing your answer in words.

Suppose that an analyst has noticed that the return on equity of the XYZ Company has declined from 2012 to 2013. Using the DuPont formula, explain the source of this decline.

(millions)	2013	2012
Sales	$1,000	$900
Earnings before interest and taxes	$400	$380
Interest expense	$30	$30
Taxes	$100	$90
Total assets	$2,000	$2,000
Shareholders equity	$1,250	$1,000