You Give me a minute to look at these financial statements and to remember what I know about the DuPont analysis. Accounts receivable Balance Sheet Data $1.200.000 AGD payable 2400.000 Accruals 1.500.000 payable 7200.000 Current Long-term de Tales 51.410,000 480.000 1990.090 $10.000 4.500.000 540,000 1.440,000 2 0.000 050,000 $14.400,000 Income Statement Data Sales 524,000,000 Cost of goods sold 12,000,000 Gross profit 12.000.000 Operating expenses 6,000,000 SIT 6,000,000 rest expense EST 5,193,600 Tous 1,817,760 income 53,375,840 Need assets 7200.000 R ed camg Toalety $14.400,000 Total debt and Total assets I remember correctly, the DuPont equation break down our ROE into three componentratos: the et profit margin the total and the equity ratio And, according to my understanding of the DuPont o di calculation of ROE, the three to provide insights into the company's management of sales and share price effectiveness in using the company's assets, and control over expenses Now, let's see your notes with yours, and then wen t powergies that will improve the ratios. I'm going to check the box to the side of your calculated value your calculation is correct and leave it unchecked if your calculation is incorrect Cepes Manufacturing Inc. Dupont Analysis Value Correct Correct Ratios Asset management ratio Gross profit margin ) Operating profit margin() Net profit margin (%) Return on equity (%) Financing ratios tout multiplier 1.670 Chloe OK, It looks like I've got a couple of income values s improvement how me your calculations, and then we can tak strategies for You Tve just made rough calculations, so let me complete this table by inputting the components of each ratio and its values Cepe Manufacturing Inc. DuPont Analysis Calculation Raties Profita ratios Gross profit margin() Operating profit margin() Net profit margin() Return on equity (5) Asset management ratio Total asset tumover Financing ratios Equity multiple Chloe I see what I did wrong in my computations. Thanks for viewing these calculations with me. You saved me from a lot of embarrassment Eric would have been very disappointed in met had showed him original work. So, now lee's switch topics and identity general strategies that could be used to positively affect Cuptus ROE You OK, so given your knowledge of the component is used in the DuPont euation, which of the following strategies should improve the company's RDE? Check all that apply) Decrease the amount of debt financing used by the company which will dea the total turnover ratio Use more quity financing in its capital structure, which increase the equity multiplier Decrease the company's use of capital be t ween the equity multiplier Increase the efficiency of its that more was with each door of asset investment and increases the company's totale turnover Chloe I think I understand now. Thanks for taking the time to go with me, and let me know when I can return the favor Cash Accounts receivable Inventory Current assets Balance Sheet Data $1,200,000 Accounts payable 2.400,000 Accruals 3,600,000 Notes payable 7,200,000 Current liabilities Long-term debe Total liabilities Common stock 7,200,000 Retained earnings Total equity $14,400,000 Total debt and equity $1,440,000 480,000 1,920,000 3,840,000 4,300,000 8,640,000 1,440,000 4,320,000 5,760,000 $14,400,000 Income Statement Data Sales $24,000,000 Cost of goods sold 12,000,000 Gross profit 12,000,000 Operating expenses 6,000,000 EBIT 6.000.000 Interest expense 806,400 EBT 5,193,600 Taxes 1,817,760 Net Income $3,375.840 Net foed assets Total assets If I remember correctly, the DuPont equation breaks down our ROE Into three component ratios: the the total asset turnover ratio, and the 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. I'm going to check the box to the side of your calculated value your calculation is correct and leave it unchecked if your calculation is incorrect. Cepeus Manufacturing Inc. DuPont Analysis Check Correct Ratios Check if Correct Value Value Asset management ratio Total asset turnover 0 Rates Profitability ratios Gross profit margin (%) Operating profit margin (9) Net profit margin (%) Return on equity (9) D 50.00 21.64 23.44 6537 Financing ratios Equity multiplier D 1.67 0 Chloe OK, it looks like I've got a couple of incorrect values, so 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: Cepeus Manufacturing Inc. DuPont Analysis Calculation Numerator Denominator Profitability ratios Gross profit margin (N) Operating profit margin (1) Net profit margin() Return on equity (%) Asset management ratio Total acotturnover Financing ratios Equity multiplier .... . . Chloe I see what I did wrong in my computations. Thanks for viewing 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 Cepeus'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 amount of debt financing used by the company, which will decrease the total asset turnover ratio Use more equity financing in its capital structure, which will increase the equity multiplier Decrease the company's use of debt capital because I will decrease the equity multiplier 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