2 (25 marks) The following data relates to Cape Computer Company and its industry averages Cape Computer Company: Statement of Financial Position as of December 31 2021 Cash $ 77,500 Receivables 336,000 Accounts payable Notes payable $129,000 84,000 Inventories 241,500 Other current liabilities 117,000 Net fixed assets Total current assets $655,000 292.500 Total current liabilities $330,000 Long-term debt 256,500 Common equity 361,000 Total assets $947.500 Total liabilities and equity $947.500 Cape Computer Company: Income Statement for Year Ended December 31 2021 Sales $1,607,500 Cost of goods sold Gross profit Fixed operating expenses except depreciation Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Earnings before interest and taxes (EBIT) Interest Earnings before taxes (EBT) Taxes (40%) (1,353,000) $ 254,500 (143,000) $ 111,500 (41,500) $ 70,000 24.500) $ 45,500 18.200) Net income $ 27.300 Ratio Campsey Industry Average Current ratio Days sales outstanding 2.0x 35.0 days Inventory turnover 5.6x Total assets turnover 3.0x Net profit margin 1.2% Return on assets (ROA) 3.6% Return on equity (ROE) 9.0% Debt ratio 60.0% Required: a. Calculate the indicated ratios for Cape. (14 marks) b. Construct the DuPont equation for both Cape and the industry. (4 marks) c. Outline Cape's strengths and weaknesses as revealed by your analysis. (4 marks) d. Suppose Cape had doubled its sales as well as its inventories, accounts receivable, and common equity during the year. How would that information affect the validity of your ratio analysis? (Hint: Think about averages and the effects of rapid growth on ratios if averages are not used. No calculations are needed.) (3 marks) The end