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Needing some help here. Please answer all the questions (1-5) and please show your work. If using pen and paper or Word, please upload screenshots.

Needing some help here. Please answer all the questions (1-5) and please show your work. If using pen and paper or Word, please upload screenshots. Thanks!

4-24: DuPONT ANALYSIS: A firm has been experiencing low profitability in recent years. Perform an analysis of the firms 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 firms financial statements are as follows:

Industry Average Ratios
Current ratio 3x Fixed assets turnover 6x
Debt-to-capital ratio 20% Total assets turnover 3x
Times interest earned 7x Profit margin 3%
EBITDA coverage 9x Return on total assets 9%
Inventory turnover 10x Return on common equity 12.86%
Days sales outstanding 24 days Return on invested capital 11.50%

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  1. Calculate the ratios you think would be useful in this analysis.
  2. Construct a DuPont equation, and compare the companys ratios to the industry average ratios.
  3. Do the balance sheet accounts or the income statement figures seem to be primarily responsible for the low profits?
  4. Which specific accounts seem to be most out of line relative to other firms in the industry?
  5. If the firm had a pronounced seasonal sales pattern or if it grew rapidly during the year, how might that affect the validity of your ratio analysis? How might you correct for such potential problems?
Income Statement for Year Ended December 31, 2018 (Millions of Dollars)

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