Ratios	Value	Correct/Incorrect	Ratios	Value	Correct/Incorrect
Profitability ratios			Asset management ratio
Gross profit margin (%)	40.00		Total assets turnover	1.67
Operating profit margin (%)	12.00
Net profit margin (%)	15.00		Financial ratios
Return on equity (%)	45.59		Equity multiplier	1.82

JASON:OK, it looks like Ive got a couple of incorrect values, so show me your calculations, and then we can talk strategies for improvement.

YOU:Ive 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

Ratios	Calculation		Value
Profitability ratios	Numerator		Denominator
Gross profit margin (%)		/		=
Operating profit margin (%)		/		=
Net profit margin (%)		/		=
Return on equity (%)		/		=
Asset management ratio
Total assets turnover		/		=
Financial ratios
Equity multiplier		/		=

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 if I had showed her my original work.

So, now lets switch topics and identify general strategies that could be used to positively affect Cepeuss ROE.

YOU:OK, so given your knowledge of the component ratios used in the DuPont equation, which of the following strategies should improve the companys ROE?

Check all that apply.

Use more equity financing in its capital structure, which will increase the equity multiplier.

Use more debt financing in its capital structure and increase the equity multiplier.

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

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

FILL OUT CHART