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pls need help asap A sheaf of papers in her hand, your friend and colleague, Chloe, steps into your office and asked the following. CHLOE:
pls need help asap
A sheaf of papers in her hand, your friend and colleague, Chloe, steps into your office and asked the following. CHLOE: Do you have 10 or 15 minutes that you can spare? YOU: Sure, I've got a meeting in an hour, but I dor't want to start something new and then be interrupted by the meeting, so how can I help? CHLOE: 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. Eric, my new team leader, suggested that I start by using a DuPont analysis, and I'd like 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 Eric 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 statements and to remember what I know about the DuPont analysis. If 1 remember correctlv. the DuPont equation breaks down cur foE inta threm comnanent rabos: the , the total asset turnover ratio, and the And, according to my understanding of the Dupont equation and its calculotion of ROE, the three ratios provide insights into the company's effectivanacs in usina the comnanvis actote. and Now, let's see your notes with your ratios, and then we can talk about poss ble strategies that will improve the ratios. I'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 CHLOE: OK, it looks like IVe got a couple of incorrect values, so show me your calculations, and then we can tak strategles for improvement. YoU: IVe Just made rough calculations, so let me complete this table by inputing the components of each ratio and its value: Do not round intermediate calculations and round your final answers up to two decimaly, Hydre Cosmetics Inc, Dupont Analysis Do not round intermediate calculations and round your final answers up to two decimals. Hydra Cosmetics Inc. DuPont Analysis CHLOE: I see what i did wrong in my computations. Thanks for reviewing these calculations with me. You saved me from a lot of embarrassmentl 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 strotegies 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 opply. Decrease the company's use of debt capital becouse it will decrease the equity multiplier. Increase the cost and amount of assets necessary to generate each doliar of sales because it will increase the company's total assets turnover. Use more debt financing in its capital structure and increase the equity multiplier. Use more equity finanding in its capital structure, which will increase the equity multiplier. 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 Step by Step Solution
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