Corporate decision makers and analysts often use a technique called Dupont analysis to understand and assess the factors that drive a company's financial performance, as measured by its return on equity (ROE). Depending on the version used, the DuPont equation will deconstruct the firm's ROE, its best measure of financial performance, into two or three important factors, or drivers. Dupont analysis can be conducted using either the traditional Dupont equation or the extended Dupont equation. The tradibional equation is constructed using two drivers, whereas the extended Dupont equation uses three variables to examine a firm's floE performance. Complete the following sentences by entering the appropriate words or phrases. In the extended Dutiont equation, a firm's Rot refects (1) its use of debt financing, or leverage, as reflected by its (2) the emciency with which it uses its assets, at measured by the manage its production costs and operating expenses, as summaried by its In contrast, sometimes it is useful to focus just on asset proftability and financial leverage in this case, you would use the traditional version of the equation, in which the firmis efficiency and profitability motrics are muliplied and summorized in a single measure, the In this onalysis, a company's financial performance is expected to result from boch management's financing decisions ond its effectiveness and efficiency in generating profts using the from's arset base. Most invettors and analysts in the financial community observe a firm's noE closely. The ROE can be calculated by dividing the firms net income oy the shareholden' equity, or it can be reduced into the key factors thst drive the oE. Investors and analysts like to focus on these drivers to develop a mare holiktic image of what is chonging within a company. An analyst collected the followine fiscal year 2018 data for firms operoting in the agricutural sector. Use the data to computo the net profit margin The foocwing dollar values are expreased in mabons of U.S. tollers.) equation, in which the firm's efficiency and profitability metrics are multiplied and summarized in a single measure, the In this analysis, a company's financial performance is expected to result from both management's financing decisions and its effectiveness and efficiency in generating profits using the firm's asset base. Most investors and analysts in the financial community observe a firm's ROE closely. The ROE can be calculated by dividing the firm's net income by the shareholders' equity, or it can be reduced into the key factors that drive the ROE. Investors and analysts like to focus on these drivers to develop a more holistic image of what is changing within a company. An analyst collected the following fiscal year 2018 data for firms operating in the agricultural sector. Use the data to compute the net profit margin (NPM), total asset turnover (TAT), and equity multiplier (EM) values required for a Dupont analysis. (Note: Round your answers to two decimal places, The following dollar values are expressed in mullons of U.S. dollars:) Referting to this data, which of the following conclusions is true about the firms' RoEs? Compared to companios A and C, firm B unes more finandial leverage and exhibits the highest debt ratio. Compared to firms E and C, firm A doet the best job of containing its conts and managing its eav obligations. Compared to firms B and C, firm A's exceptional ROE perfornance appears to result from its superior eeficiency in using its asset basen and its heavily leveroged capital structure. Firm As equity multipler indicates that it has the lonest deot ratio of the three firms