Cash $1,200,000 Accounts payable $1,440,000 Sales $24,000,000 Accounts receivable 2,400,000 Accruals 480,000 Cost of goods sold 14,400,000 Inventory 3,600,000 Notes payable 1,920,000 Gross profit 9,600,000 Current assets 7,200,000 Current liabilities 3,840,000 Operating expenses 6,000,000 Long-term debt 5,520,000 EBIT 3,600,000 Total liabilities 9,360,000 Interest expense 892,800 Common stock 1,260,000 EBT Net fixed assets 7,200,000 Retained earnings 3,780,000 Taxes 2,707,200 947,520 Total equity 5,040,000 Net income $1,759,680 Total assets $14,400,000 Total debt and equity $14,400,000 If I remember correctly, the DuPont equation breaks down our ROE into three component ratios: the, turnover ratio, and the the total 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 the side of your calculated value if your calculation is correct and leave it unchecked if your calculation is incorrect. Cepeus Manufacturing Inc. DuPont Analysis Ratios Value Correct/Incorrect. Ratios Value Correct/Incorrect Profitability ratios Gross profit margin (%) 40.00 Asset management ratio Total assets turnover 1.67 Operating profit margin (%) 11.28 Net profit margin (%) 12.22 Financial ratios Return on equity (%) 31.43 Equity multiplier 1.54 Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) Asset management ratio Total assets turnover Financial ratios Equity multiplier Numerator Denominator LANDON: I see what I did wrong in my computations. Thanks for reviewing these calculations with me. You saved me from a lot of embarrassment! Amelia would have been very disappointed in me if I had showed her 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 assets turnover ratio. Increase the cost and amount of assets necessary to generate each dollar of sales because it will increase the company's total assets turnover Decrease the company's use of debt capital because it will decrease the equity multiplier Increase the firm's bottom-line profitability for the same volume of sales, which will increase the company's net profit margin.