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	3.10x		Fixed assets turnover	6.75x
Debt-to-capital ratio	22.12%		Total assets turnover	3.50x
Times interest earned	14.99x		Profit margin	9.28%
EBITDA coverage	14.25x		Return on total assets	32.59%
Inventory turnover	11.08x		Return on common equity	52.39%
Days sales outstandinga	17.89 days		Return on invested capital	43.27%

aCalculation is based on a 365-day year.

Balance Sheet as of December 31, 2016 (Millions of Dollars)
Cash and equivalents	$35		Accounts payable	$19
Accounts receivables	23		Other current liabilities	11
Inventories	60		Notes payable	21
Total current assets	$118		Total current liabilities	$51
			Long-term debt	11
			Total liabilities	$62
Gross fixed assets	95		Common stock	40
Less depreciation	38		Retained earnings	73
Net fixed assets	$57		Total stockholders' equity	$113
Total assets	$175		Total liabilities and equity	$175

Income Statement for Year Ended December 31, 2016 (Millions of Dollars)
Net sales	$350.0
Cost of goods sold	241.5
Gross profit	$108.5
Selling expenses	35.0
EBITDA	$73.5
Depreciation expense	10.5
Earnings before interest and taxes (EBIT)	$63.0
Interest expense	2.9
Earnings before taxes (EBT)	$60.1
Taxes (40%)	24.0
Net income	$36.1

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

	Firm	Industry Average
Current ratio	x	3.10x
Debt to total capital	%	22.12%
Times interest earned	x	14.99x
EBITDA coverage	x	14.25x
Inventory turnover	x	11.08x
Days sales outstanding	days	17.89days
Fixed assets turnover	x	6.75x
Total assets turnover	x	3.50x
Profit margin	%	9.28%
Return on total assets	%	32.59%
Return on common equity	%	52.39%
Return on invested capital	%	43.27%

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	%	9.28%
Total assets turnover	x	3.50x
Equity multiplier	x	x