Check all that apply.

1.Decrease the amount of debt financing used by the company, which will decrease the total asset turnover ratio.

2. Decrease the companys use of debt capital because it will decrease the equity multiplier.

3. Increase the interest rate on its notes payable or long-term debt obligations because it will reduce the companys net profit margin.

4. Increase the efficiency of its assets so that it generates more sales with each dollar of asset investment and increases the companys total asset turnover.

Balance Sheet Data				Income Statement Data
Cash	$700,000	Accounts payable	$840,000	Sales	$14,000,000
Accounts receivable	1,400,000	Accruals	280,000	Cost of goods sold	7,000,000
Inventory	2,100,000	Notes payable	1,120,000	Gross profit	$7,000,000
Current assets	$4,200,000	Current liabilities	$2,240,000	Operating expenses	3,500,000
		Long-term debt	3,640,000	EBIT	$3,500,000
		Total liabilities	$5,880,000	Interest expense	571,200
		Common stock	980,000	EBT	$2,928,800
Net fixed assets	5,600,000	Retained earnings	2,940,000	Taxes	1,025,080
		Total equity	$3,920,000	Net income	$1,903,720
Total assets	$9,800,000	Total debt and equity	$9,800,000

		Hydra Cosmetics Inc. DuPont Analysis
Ratios	Value	Correct/Incorrect	Ratios	Value	Correct/Incorrect
Profitability ratios			Asset management ratio
Gross profit margin (%)	50.00	?	Total asset turnover	1.43	?
Operating profit margin (%)	20.92	?			?
Net profit margin (%)	19.43	?	Financial ratios		?
Return on equity (%)	46.35	?	Equity multiplier	1.67	?

Hydra Cosmetics Inc. DuPont Analysis Calculation Value Profitability ratios Numerator Denominator Gross profit margin (%) / = / = Operating profit margin (%) Net profit margin (%) / = Return on equity (%) / = Asset management ratio II Total asset turnover Financing ratios Equity multiplier / =