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 $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	2.79x		Fixed assets turnover	7.27x
Debt-to-capital ratio	22.75%		Total assets turnover	3.48x
Times interest earned	22.68x		Profit margin	8.84%
EBITDA coverage	27.89x		Return on total assets	32.49%
Inventory turnover	13.16x		Return on common equity	50.55%
Days sales outstandinga	23.52 days		Return on invested capital	40.1%

aCalculation is based on a 365-day year.

Balance Sheet as of December 31, 2016 (Millions of Dollars)
Cash and equivalents	$85		Accounts payable	$53
Accounts receivables	71		Other current liabilities	22
Inventories	142		Notes payable	53
Total current assets	$298		Total current liabilities	$128
			Long-term debt	31
			Total liabilities	$159
Gross fixed assets	223		Common stock	116
Less depreciation	76		Retained earnings	170
Net fixed assets	$147		Total stockholders' equity	$286
Total assets	$445		Total liabilities and equity	$445

Income Statement for Year Ended December 31, 2016 (Millions of Dollars)
Net sales	$890.0
Cost of goods sold	631.9
Gross profit	$258.1
Selling expenses	80.1
EBITDA	$178.0
Depreciation expense	20.5
Earnings before interest and taxes (EBIT)	$157.5
Interest expense	5.0
Earnings before taxes (EBT)	$152.5
Taxes (40%)	61.0
Net income Please Find the Following Ratios: Debt to total Capitol Inventory Turnover Return on Total Assets Return on Invested Capitol Please Find: Profit Margin, Total Aasset Turnover and Equity Multiplier for the company Equity Multiplier of the Industry	$91.5