Ratio

Campsey IndustryAverage

Current ratio _____________ 2.0 X

Days sales outstanding _____________ 35 days

Inventory turnover _____________ 5.6 X

Total assets turnover _____________ 3.0 X

Net profit margin _____________ 1.2%

Return on assets (ROA) _____________ 3.60%

Return on equity (ROE) _____________ 9.00%

Debt ratio _____________ 60%

b. Construct the DuPont equation for both Cary and the industry (Only construct DuPont ROA

for Cary and the industry)

c. Outline Cary's strengths and weaknesses as revealed by your analysis.

d. Suppose Cary had doubled its sales as well as its inventories, accounts receivables, and

common equity during 2009. How would that information affect eh validity of your ratios

analysis? (Hint: Think about averages and the effects of rapid growth on ratios if averages are

not used. No calculations needed)

2. Data for Cary Company and its industry average follow. Balance Sheet as of Dec. 31 Assets Liabilities and Owner's Equity 2016 2016 Current Assets Current Liabilities Cash 75,500 Accts payable 127,000 AfR 330,000 Notes payable 84,000 Inventories 251,500 Other current liabilities 115,000 Total CA 657,000 Total CL 326,000 Net fixed assets Long-term debt 266,500 Net plant and equipment 282,500 Total Liabilities 592,500 Common Equity 347,000 Total Assets 939,500 Total Liabilities and Equity 939,500 MBASSOA Fall 2018 HWl Income statement for the year ending December 31 2016 Sales 1,600,500 COGS (1,353,000) Gross profit 247,500 Fixed operating expenses except depreciation (140,000) Earnings before interest, taxes, depre and amort (EBITDA) 107,500 Depreciation (40,000) EBIT (Opering income) 67,500 Interest expense (24,000) EBT (Taxable income) 43,500 Taxes {40%) (17,400) Net income 26,100