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 bax to the side of your calculated value if your calculation is correct and leave it unchecked if your calculation is incorrect. Canis Major Veterinary Supplies Inc. DuPont Analysis Value Correct/incorrect 1.67 Ratios Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) Value Correct/Incorrect Ratios Asset management ratio 40.00 Total assets turnover 12.00 13.00 Financial ratios 39.51 Equity multiplier > > > 1.82 E AKIRA: 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: Balance Sheet Data $1,300,000 Cash Accounts receivable Inventory Current assets 2,600,000 3,900,000 7,800,000 Accounts payable $1,560,000 Accruals 520,000 Notes payable 2,080,000 Current liabilities 4,160,000 Long-term debt 4,420,000 Total liabilities 8,580,000 Common stock 1,755,000 Retained earnings 5,265,000 Total equity 7,020,000 Total debt and equity $15,600,000 Income Statement Data Sales $26,000,000 Cost of goods sold 15,600,000 Gross profit 10,100,000 Operating expenses 6,500,000 EBIT 3,900,000 Interest expense 780,000 EBT 3,120,000 Taxes 1,092,000 Net income $2,028,000 Net fixed assets 7,800,000 Total assets $15,600,000 If I remember correctly, the DuPont equation breaks down our ROE into three component ratios: the net profit margin the turnover ratio, and the equity multiplier And, according to my understanding of the DuPont equation and its calculation of ROE, the three ratios provide insights into the comp Calculation Value Numerator Denominator Ratios Profitability ratios Gross profit margin (9) Operating profit margin (%) Net profit margin (%) Return on equity (%) Asset management ratio Total assets turnover Financial ratios Equity multiplier AKIRA: I see what I did wrong in my computations. Thanks for reviewing these calculations with me. You saved embarrassment: Emma 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 Canis Major's YOU: OK, so given your knowledge of the component ratios used in the DuPont equation, which of the following Check all that apply. Use more debt financing in its capital structure and increase the equity multiplier. Increase the interest rate on its notes payable or long-term debt obligations because it will reduce the company's net profit margin. Increase the efficiency of its assets so that it generates more sales with each dollar of asset investment and increases the company's total assets tumover Decrease the amount of debt financing used by the company, which will decrease the total assets turnover ratio. AKIRA: 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