Click here to read the eBook: Potential Misuses of Roe DUPONT ANALYSIS 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 3.17x Fixed assets turnover 5.36x Debt-to-capital ratio 17.48% Total assets turnover 3.00x Times interest earned 6.90x Profit margin 3.56% EBITDA coverage 7.34x Return on total assets 11.37% Return on common equity 16.73% Inventory turnover 9.52x Days sales outstandinga 20.18 days Calculation is based on a 365-day year. Return on invested capital 14.16% Balance Sheet as of December 31, 2016 (Millions of Dollars) Cash and equivalents $67 Accounts payable Accounts receivables Other current liabilities Enventories 124 Notes payable Total current assets $233 Total current liabilities $89 Long-term debt Total liabilities Gross fixed assets 188 Common stock 85 Less depreciation 67 Retained earnings 166 Net fixed assets $121 Total stockholders' equity $251 Total assets $354 Total liabilities and equity $354 Income Statement for Year Ended December 31, 2016 (Millions of Dollars) Net sales $590.0 Cost of goods sold 483.8 Gross profit $106.2 Selling expenses 53.1 EBITDA $53.1 Depreciation expense 7.1 Earnings before interest and taxes (EBIT) $46.0 Interest expense 4.8 Earnings before taxes (EBT) $41.2 Taxes (40%) 16.5 Net income $24.7 a. Calculate the following ratios. Do not round intermediate steps. Round your answers to two decimal places. Firm Industry Average Current ratio 2.62 x 3.17x Debt to total capital $.38 17.48% Times interest earned 9.58 6.90x EBITDA coverage 11.06 7.34x Inventory turnover 3.90 3 3 3 9.52x Days sales outstanding 93.59 days 20.18days Fixed assets turnover 4.88 5.36x Total assets turnover 3.00x s Profit margin 3.56% Return on total assets 11.37% Return on common equity 16.73% 3 3 Return on invested capital 14.16% b. 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 % 3.56% Total assets turnover 3.00x Equity multiplier