Komatsu Ltd. has appointed you to analyze the financial performance of the company and make some recommendations on how to overcome its weaknesses. The company wants you to make a comparative analysis of the firms performance against the industry. The most recent industry average ratios and the firms financial statements are as follows:

Industry Average Ratios
Current ratio 2.8	Quick Ratio 1.8
Debt-to-Equity ratio 20%	Total Assets Turnover 1.50
Times interest earned 9	Net Profit margin 8%
Inventory turnover 10	Return on Total Assets 9%
Financial Leverage 2.1	Return on Equity 25.99%

Items	Amount ($)	Items	Amounts ($)
Cash	78,000	Accounts Payable	45,000
Total Operating Expense	85,500	Interest Expense	4,500
Income Tax	18,000	Total Sales	860,000
Net Fixed Assets	147,000	Long-term Bank Loan	50,000
Cost of Goods Sold	660,000	Common Stock Equity	315,000
Inventories	139,000	Other Current Liabilities	11,000
Accounts Receivables	66,000	Notes Payable (Maturity within 1 year)	9,000
Total Operating Profit	114,500	Net Profit after tax	92,000

• Construct the DuPont equation for both Komatsu and the industry. Interpret results. (3 mark)
• Outline the strengths and weaknesses of Komatsu Ltd. as revealed by your analysis and write recommendations. (3 marks)