Question: please help I know its a lot but any help helps all the information from the question is here. Walking down the hall of your

please help I know its a lot but any help helps

all the information from the question is here.

please help I know its a lot but any help helpsplease help I know its a lot but any help helpsplease help I know its a lot but any help helpsplease help I know its a lot but any help helpsplease help I know its a lot but any help helps
Walking down the hall of your office building with a sheaf of papers in his hand, your friend and colleague, Jason, stepped into your office and asked the fol lowing. 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 general 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 if 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 financial statements and to remember what I know about the DuPont analysis. Balance Sheet Data Income Statement Data Cash $500,000 Aacounts payable $600,000 Sales $10,000,000 Accounts receivable 1,000,000 Accruals 200,000 Cost of goods sold 5,000,000 Inventory 1,500,000 Notes payable 800,000 Gross profit 5,000,000 Current assets 3,000,000 Current liabilities 1,600,000 Operating expenses 2,500,000 Long-term debt 3,300,000 EBIT 2,500,000 Total liabilities 4,900,000 Interest expense 492,000 Common stock 525,000 EBT 2,008,000 Net xed assets 4,000,000 Retained earnings 1,575,000 Taxes 702,800 Total equity 2,100,000 Net income $1,305,200 Total assets $7,000,000 Total debt and equity $7,000,000 If I remember correctly, the DuPont equation breaks down our return on equity (ROE) into three component ratios: the the 7 ratio, and the v . And, according to my understanding of the DuPont equation and its calculation of ROE, the three ratios provide insights into the company's V , effectiveness in using the company's assets, and V Now, let's see your notes with your ratios, and then we can talk about possible strategies that will improve the ratios. In the following table, select whether each of the ratios is correct or incorrect. Fave Media Systems Inc.DuPont Analysis Ratios Profitability ratios Gross profit margin (\"fo) Operating prot margin (%) Net profit margin (\"/o) Return on equity We) Value 50.00 20.08 18.65 38.14 Correct] Incorrect 4444 Ratios Value Asset management ratio Total assets tu rnover 1 . 43 Financial ratios Equity multiplier 1.43 Correct] Incorrect 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: Note: Do not round intermediate calculations for this part. Pavo Media Systems Inc.DuPont Analysis Ratios Profitability Ratios Numerator Calculation Denominator Value Gross profit margin (%) Y / Y = V Operating prot margin (0/0) 7 I Y = Y Net prot margin (We) Y / Y = V Return on equity (Ufa) Y j V = Y Asset management ratio Numerator Calculation Denominator Value Total assets turnover '7 / V = Y Financial ratios Numerator Calculation Denominator Value Equity multiplier V I V = Y JASON: I see what I did wrong in my computations. Thanks for reviewing these calculations with me. You saved me from a lot of embarrassment! Anja would have been very disappointed in me ifI had her showed my original work. So, now let's switch topics and identify general strategies that could be used to positively affect Pavo'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 a.\" that apply. Increase the firm's bottom-line profitability for the same volume of sales, which will increase the company's net profit margin. Use more equity financing in its capital structure, which will increase the equity multiplier. Increase the cost and amount of assets necessary to generate each dollar of sales because it will increase the compa ny's total assets turnover: Use more debt financing in its capital structure and increase 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

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