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 if your calculation is correct and leave it unchecked if your calculation is incorrect. Cepeus Manufacturing Inc. DuPont Analysis Value Correct/Incorrect Value Correct/Incorrect Ratios Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (6) Return on equity (9) Ratios Asset management ratio Total assets turnover 40.00 1.67 12.00 15.00 Financial ratios 45.59 Equity multiplier 1.82 y JASON: 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: Do not round intermediate calculations and round your final answers up to two decimals. Cepeus Manufacturing Inc. DuPont Analysis Calculation Value Numerator Denominator Ratios Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) Asset management ratio Total assets turnover Financial ratios Equity multiplier Check all that apply. Use more equity financing in its capital structure, which will increase the equity multiplier. 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. Increase the firm's bottom-line profitability for the same volume of sales, which will increase the company's net profit margin. Decrease the company's use of debt capital because it will decrease the equity multiplier JASON: 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 A sheaf of papers in his hand, your friend and colleague, Jason, steps into your office and asked the following. JASON: Do you have 10 or 15 minutes that you can spare? YOU: Sure, I've got a meeting in an hour, but I don't want to start something new and then be interrupted by the meeting, so how can I help? JASON: I've been reviewing the company's financial statements and looking for ways to improve our performance, in general, and the company's return on equity, or ROE, in particular. Anja, 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 whether I've missed anything. Here are the balance sheet and income statement data that Anja 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 fincial statements and to remember what I know about the DuPont analysis. YOU: Give me a minute to look at these financial statements and to remember what I know about the DuPont analysis. Balance Sheet Data Income Statement Data Accounts payable Sales Cash Accounts receivable Inventory Current assets Accruals $800,000 1,600,000 2,400,000 4,800,000 $960,000 320,000 1,280,000 2,560,000 2,720,000 Cost of goods sold Gross profit $16,000,000 9,600,000 6,400,000 Notes payable Current liabilities 4,000,000 Operating expenses EBIT . Interest expense 5,280,000 1,080,000 3,240,000 Long-term debt Total liabilities Commqh stock Retained earnings Total equity Total debt and equity 2,400,000 480,000 1,920,000 EBT Net fixed assets 4,800,000 Taxes 480,000 $1,440,000 Net Income Total assets $9,600,000 4,320,000 $9.600,000