Problem $3$:

Gulf Controls, Inc., has a net profit margin of $10$ percent and earnings after taxes of $$600,000.$ Its current

balance sheet follows:

a$)$ Calculate Gulf's return on stockholders' equity.

b$)$ The industry average ratios are as follows:

Compare Gulf Controls with the average firm in the industry. What is the source of the major

differences between the Gulf and the industry average ratios?