b. Construct the DuPont equation for both Cary and the industry (Only construct DuPont ROA for Cary and the industry)

c. Outline Carys strengths and weaknesses as revealed by your analysis.

d. Suppose Cary had doubled its sales as well as its inventories, accounts receivables, and common equity during 2018. How would that information affect the validity of your ratios analysis? (Hint: Think about averages and the effects of rapid growth on ratios if averages are not used. No calculations needed)

2. Data for Cary Company and its industry average follow. A/R Balance Sheet as of Dec. 31 (Millions of Dollars) Assets Liabilities and Owner's Equity 2019 2019 Current Assets Current Liabilities Cash 95,500 Accts payable 227,000 332,000 Notes payable 74,000 Inventories 245,500 Other current liabilities 95,000 Total CA 673,000 TotalCL 396,000 Net fixed assets Long-term debt 200,500 Net plant and equipment 285,500 Total Liabilities 596,500 Common Equity 357,000 Total Assets 958.500 Total Liabilities and Equity 953,500 Income statement for the year ending December 31 Sales COGS Gross profit Fixed operating expenses except depreciation Earnings before interest, taxes, depre and amort (EBITDA) Depreciation EBIT (Opering income) Interest expense EBT (Taxable income) Taxes (40%) Net income 2019 1,800,500 (1,462,000) 338,500 (210,000) 128,500 140,000) 88,500 (44,000) 44,500 (17,800) 26,700 a. Calculate the indicated ratios for Cary. Industry Average Ratio Cary Current ratio 2.0 X Days sales outstanding 35 days Inventory turnover 5.6 x Total assets turnover 3.0 x Net profit margin 1.2% Return on assets (ROA) 3.60% Return on equity (ROE) 9.00% Debt ratio 60%