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 $3 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	3.72x		Fixed assets turnover	7.07x
Debt-to-capital ratio	17.70%		Total assets turnover	3.60x
Times interest earned	6.61x		Profit margin	4.11%
EBITDA coverage	8.46x		Return on total assets	15.32%
Inventory turnover	11.70x		Return on common equity	20.80%
Days sales outstandinga	16.74 days		Return on invested capital	19.42%

aCalculation is based on a 365-day year.

Balance Sheet as of December 31, 2016 (Millions of Dollars)
Cash and equivalents	$88		Accounts payable	$44
Accounts receivables	57		Other current liabilities	22
Inventories	158		Notes payable	40
Total current assets	$303		Total current liabilities	$106
			Long-term debt	26
			Total liabilities	$132
Gross fixed assets	242		Common stock	106
Less depreciation	105		Retained earnings	202
Net fixed assets	$137		Total stockholders' equity	$308
Total assets	$440		Total liabilities and equity	$440

Income Statement for Year Ended December 31, 2016 (Millions of Dollars)
Net sales	$880.0
Cost of goods sold	686.4
Gross profit	$193.6
Selling expenses	96.8
EBITDA	$96.8
Depreciation expense	20.2
Earnings before interest and taxes (EBIT)	$76.6
Interest expense	7.3
Earnings before taxes (EBT)	$69.3
Taxes (40%)	27.7
Net income	$41.6

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

	Firm	Industry Average
Current ratio	x	3.72x
Debt to total capital	%	17.70%
Times interest earned	x	6.61x
EBITDA coverage	x	8.46x
Inventory turnover	x	11.70x
Days sales outstanding	days	16.74days
Fixed assets turnover	x	7.07x
Total assets turnover	x	3.60x
Profit margin	%	4.11%
Return on total assets	%	15.32%
Return on common equity	%	20.80%
Return on invested capital	%	19.42%

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	%	4.11%
Total assets turnover	x	3.60x
Equity multiplier	x	x