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 $1 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	2			Fixed assets turnover	6
Debt-to-capital ratio	17	%		Total assets turnover	3
Times interest earned	5			Profit margin	3.75	%
EBITDA coverage	8			Return on total assets	11.25	%
Inventory turnover	9			Return on common equity	15.20	%
Days sales outstandinga	24	days		Return on invested capital	15.10	%
aCalculation is based on a 365-day year.

Balance Sheet as of December 31, 2019 (Millions of Dollars)
Cash and equivalents	$	89		Accounts payable	$	56
Accounts receivables		78		Other current liabilities		28
Inventories		211		Notes payable		56
Total current assets	$	378		Total current liabilities	$	140
				Long-term debt		22
				Total liabilities	$	162
Gross fixed assets		266		Common stock		144
Less depreciation		89		Retained earnings		249
Net fixed assets	$	177		Total stockholders' equity	$	393
Total assets	$	555		Total liabilities and equity	$	555

Income Statement for Year Ended December 31, 2019 (Millions of Dollars)
Net sales	$	915.00
Cost of goods sold		760.00
Gross profit	$	155.00
Selling expenses		82.50
EBITDA	$	72.50
Depreciation expense		14.00
Earnings before interest and taxes (EBIT)	$	58.50
Interest expense		7.50
Earnings before taxes (EBT)	$	51.00
Taxes (25%)		12.75
Net income	$	38.25

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

   	Firm	Industry Average
   Current ratio		2
   Debt to total capital	%	17	%
   Times interest earned		5
   EBITDA coverage		8
   Inventory turnover		9
   Days sales outstanding	days	24	days
   Fixed assets turnover		6
   Total assets turnover		3
   Profit margin	%	3.75	%
   Return on total assets	%	11.25	%
   Return on common equity	%	15.20	%
   Return on invested capital	%	15.10	%

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

   	Firm	Industry
   Profit margin	%	3.75%
   Total assets turnover		3
   Equity multiplier