Using the financial statements for ABC Cellphone and the industry ratios:

a) (8 marks) Calculate threeprofitability ratiosfor ABC Cellphone and compare them to the industry. For each of these three ratios, comment on why it might be viewed as positive or negative relative to the industry giving the interpretation of the ratio.

b) (7 marks) Construct the DuPont identity for ABC Cellphone and explain the ratios found and their impact on the profitability.

ABC Cellphone Statement of Comprehensive Income 2018

Sales35,799,300.

Cost of goods sold26,669,496

Other expenses 4,641,000.

Depreciation1,640,200

EBIT2,848,604.

Interest 573,200

Taxable income 2,275,404.

Taxes (40%)910,162.

Net income1,365,242.

Dividends80,000

Add to retained earnings1,285,242

Statement of Financial Position 2018

Current assets

Cash396,900.

Accounts receivable637,560.

Inventory933,400.

Total current assets1,967,860.

Fixed assets

Net plant and equipment13,411,620.

Total assets15,379,480.

Liabilities and Equity

Current liabilities

Accounts payable844,550.

Notes payable1,928,500.

Total current liabilities2,773,050.

Long-term debt 3,050,000.

Owners' equity

Common stock 322,500.

Retained earnings9,233,930.

Total equity9,556,430

Total liabilities and owners' equity15,379,480.

CELLPHONE INDUSTRY RATIOS

Current ratio1.40

Quick ratio0.39.

Cash ratio0.20

Total asset turnover2.40.

Inventory turnover30.00

Receivables turnover9.80.

Total debt ratio 0.52

Debt-equity ratio1.10

Equity multiplier2.10

Times interest earned8.10.

Cash coverage ratio8.40

Profit margin6.99%

Return on assets10.54%.

Return on equity35.23%.

Please give detail of the solution way with formulas or calculator keys, not excel way. Thanks!