A firm has been experiencing low profitability in recent years. Perform an analysis of the firm's financial position using the DuPont equation. The firm has no lease payments but has a $2 million sinking fund payment on its debt. The most recent industry average ratios and the firm's financial statements are as follows:

Industry Average Ratios
Current ratio	4.22x		Fixed assets turnover	6.08x
Debt-to-capital ratio	15.12%		Total assets turnover	3.40x
Times interest earned	13.86x		Profit margin	3.34%
EBITDA coverage	13.99x		Return on total assets	11.19%
Inventory turnover	12.75x		Return on common equity	16.66%
Days sales outstandinga	23.49 days		Return on invested capital	15.08%

aCalculation is based on a 365-day year.

Balance Sheet as of December 31, 2016 (Millions of Dollars)
Cash and equivalents	$51		Accounts payable	$34
Accounts receivables	54		Other current liabilities	14
Inventories	112		Notes payable	27
Total current assets	$217		Total current liabilities	$75
			Long-term debt	17
			Total liabilities	$92
Gross fixed assets	153		Common stock	95
Less depreciation	30		Retained earnings	153
Net fixed assets	$123		Total stockholders' equity	$248
Total assets	$340		Total liabilities and equity	$340

Income Statement for Year Ended December 31, 2016 (Millions of Dollars)
Net sales	$680.0
Cost of goods sold	550.8
Gross profit	$129.2
Selling expenses	68.0
EBITDA	$61.2
Depreciation expense	17.0
Earnings before interest and taxes (EBIT)	$44.2
Interest expense	2.2
Earnings before taxes (EBT)	$42.0
Taxes (40%)	16.8
Net income	$25.2

Calculate the following ratios. Do not round intermediate steps. Round your answers to two decimal places.

	Firm	Industry Average
Current ratio	x	4.22x
Debt to total capital	%	15.12%
Times interest earned	x	13.86x
EBITDA coverage	x	13.99x
Inventory turnover	x	12.75x
Days sales outstanding	days	23.49days
Fixed assets turnover	x	6.08x
Total assets turnover	x	3.40x
Profit margin	%	3.34%
Return on total assets	%	11.19%
Return on common equity	%	16.66%
Return on invested capital	%	15.08%

Construct a DuPont equation for the firm and the industry. Do not round intermediate steps. Round your answers to two decimal places.

	Firm	Industry
Profit margin	%	3.34%
Total assets turnover	x	3.40x
Equity multiplier	x	x

Do the balance sheet accounts or the income statement figures seem to be primarily responsible for the low profits?