You are given the following financial data for ABC company

Total Assets $ 5,000,000

Total Liabilities $ 4,000,000

Net Profit Margin 20 %

Total Asset Turnover 0.6 times

You are also given the following industry averages:

Total asset turnover 2 times

Net Profit Margin 6 %

Debt ratio 40%

(1) Compute and complete the following ratios in the table. Show your calculations

	ABC Company	Industry Average
Return on Assets (ROA)
Financial Leverage Multiplier
Return on Equity (ROE)

(2) Base on the above information and use Du Pont system, explain why ABC company

has higher (or lower) return on assets (ROA) than industry average? Why ABC

company has higher (or lower) financial leverage multiplier? Why ABC company has

higher (or lower) return on equity (ROE) than industry average? Evaluate the

companys leverage and profitability, and compare them with the industry average.