Using the table provided below, complete the following for XYZ Inc.:

1. Calculate the indicated ratios for XYZ.
2. Construct the DuPont equation for both XYZ and the industry.
3. Use your analysis to outline XYZ's strengths and weaknesses.
4. Say XYZ had doubled its sales as well as its inventories and common equity during 2013. Do you think this would affect the validity of your ratio analysis?

Ratio	XYZ Inc.	Industry Average
Current		2.0x
Quick		1.3x
Days sales outstanding		35 days
Inventory turnover		6.7x
Total assets turnover		3.0x
Profit margin		1.2%
ROA		3.6%
ROE		9.0%

Balance Sheet:

XYZ Inc.: Balance Sheet as of December 31, 2013 (in thousands)

Cash	$75,000	Accounts Payable	$150,000
Receivables	300,000	Notes Payable	90,000
Inventories	125,000	Other current liabilities	110,000
Total current assets	500,000	Total Current Liabilities	$350,000
		Long-term debt	250,000
Net fixed assets	500,000	Common equity	400,000
Total assets	$1,000,000	Total liabilities and equity	$1,000,000

XYZ Inc.: Income Statement for Year Ended December 31, 2012 (in thousands)

Sales	$1,607,500
Cost of goods sold
Materials	$717,000
Labor	453,000
Heat, light, and power	68,000
Indirect labor	113,000
Depreciation	41,500	1,392,500
Gross Profit		$215,000
Selling expenses		115,000
General and administrative expenses		30,000
Earning before interest and taxes (EBIT)		$70,000
Interest expense		24,500
Earnings before taxes (EBT)		$45,500
Federal and state income taxes (40%)		18,200
Net income		$27,300