Walking down the hall of your office building with a sheaf of papers in his hand, your friend and colleague, Akira, stepped into your office and asked the following AKIRA: Do you have 10 or 15 minutes that you can spore? YOU: Sure, I've got a meeting in an hout, but I don't want to start something new and then be interrupted by the meeting, so how can I help? AKIRA: I've been reviewing the company's financial statements and looking for general ways to improve our performance, in general, and the company's return on equity, or Roe, in particular. Emma, 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 if I've missed anything. Here are the balance sheet and income statement data that Emma 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. Balance Sheet Data Cash $24,000,000 Accounts receivable $1,200,000 2.400,000 3,600,000 7,200,000 $1,440,000 480,000 1.920,000 12,000,000 Income Statement Data Sales Cost of goods sold Gross profit Operating expenses EBIT Inventory Current assets Accounts payable Accruals Notes payable Current liabilities Long-term debt Total lobes Common stock Retained earnings Total equity Total debt and equity 3,840,000 2,760,000 6,600,000 12,000,000 6,000,000 6,000,000 561,600 5,438,400 1,903.410 Interest expense 1,350,000 4,050,000 Net wed assets 4,800,000 Taxes Net Income $3,534,960 5,400,000 $12,000,000 Total assets $12,000,000 If I remember correctly, the DuPont equation breaks down our return on equity (ROE) into three component ratios: the ratio, and the the ary And, according to my understanding of the DuPont equation and its calculation of Roe, the three ratios provide insights into the company's effectiveness in using the company's assets, and Now, let's see your notes with your ratios, and then we can talk about possible strategies that will improve the ratios. In the table below, select whether each of the ratios is correct or incorrect Value Correct/Incorrect Ratios Value Correct/Incorrect Pave Media Systems Inc.DuPont Analysis Ratios Profitability ratios Gross profit margin (4) Operating profit margin (5) Net profit margin (4) Return on equity () Asset management ratio Totale turnover 50.00 2.00 22.66 29.46 Finanding roties Equity multiplier 107.33 1.82 AKIRAI OK, it looks like I've got a couple of incorrect values, to show me your calculations, and then we can talk strategies for Improvement YOU I've just made rough calculations, so let me complete this table by Inputting the components of each ratio and its value: Note: Do not round Intermediate calculations for this part Pavo Media Systems Inc.DuPont Analysis Calculation Value Numerater Denominator Ratios Profitability ratios Gross profit margin (%) Operating profit margin () Net profit margin (9) Return on equity (9) Asset management ratio Total asset tumover Financing ratios Equity multiplier AKIRA: I see what I did wrong in my computations. Thanks for reviewing these calculations with me. You saved me from a lot of embarrassment Emma would have been very disappointed in me if I had hershowed my original work. So, now let's switch topics and Identity general strategies that could be used to positively affect Povo's ROE. YOU: OK, so given your knowledge of the component ratlos used in the DuPont equation, which of the following strategies should Improve the company's ROE? Check all that apply. Increase the firm's bottom-line profitability for the same volume of sales, which will increase the company's net profit margin. Reduce the company's operating expenses, its cost of goods sold, and/or the Interest rate on its borrowed funds because this will Increase the company's net profit margin. Use more equity financing in its capital structure, which will increase the equity multiplier. Decrease the amount of debt financing used by the company, which will decrease the total asset turnover ratio. AKIRA: 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 Y