DuPont Framework The numbers for Faulty Company and Benchmark Company for the year 2009 are as follows:

1. Compute return on equity, return on sales, asset turnover, and the assets-to-equity ratio for both Faulty and Benchmark.
2. Briefly explain why Faulty’s return on equity is lower than Benchmark’s.

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Faulty Benchmark Cash 140 $ 500 Accounts receivable 900 2,740 Inventory 2,200 6,100 Property, plant, and equipment 1,800 6,300 Total liabilities 3,780 11,730 Stockholders' equity 1,260 3,910 Sales ..... 12,000 45,000 Cost of goods sold 7,650 32,100 Wage expense Other expenses Net income 1,300 4,200 2,940 7,760 110 940