You are given the following information on Corrigan Corporation:

(See Attached Financial Statements and industry information for 2011 and 2012.)

A) Compute Corrigan's profitability ratios [(1) operating margin, (2) profit margin, (3) ROA, and (4) ROE] for 2011 and 2012.

B) Discuss Corrigan's profitability situation in 2012.

C) Show the Dupont analysis for Corrigan and the industry for 2012. Show each term of the Dupont for Corrigan and the industry.

D) Based on the Dupont analysis, what would you recommend to Corrigan's management?

Corrigan Corporation: Balance Sheets as of December 31 2012 72,000 439,000 Cash Accounts receivable Inventories Total Current Assets Land and buildings Machinery Other fixed assets Total Assets 894,000 1,405,0000 238,000 132,000 61,000 $1,836,000 2011 65,000 328,000 813,000 1,206,000 271,000 133,000 57.000 $1,667,000 1121 Accounts and Notes Payable Accrued Liabilities Total Current Liabilities Long term Debt Common Stock Retained earings Total Common Equity Total liabilities and equity 432,000 170,000 602,000 404,290 575,000 254,710 829,710 $1,836,000 409,500 162,000 571,500 258,898 575,000 261,602 836,602 $1,667,000 Corrigan Corporation: Income Statements for Years Ending December 31 2012 Sales Cost of Goods Sold Gross operating Profit SG&A Depreciation Interest expenses Earnings before taxes Taxes (40%) Net Income 2011 $4,240,000 3,680,000 560,000 236,320 159,000 134,000 30,680 12,272 18.408 $3,635,000 2,980,000 655,000 213,550 154,500 127,000 159,950 63,980 95.970 Industry Financial Ratios Current Ratio Inventory Ratio Days sales outstanding Fixed assets turnover Total assets turnover Return on assets Return on equity Profit margin Total Debt to assets ratio 2012 2.7x 7.0x 32 days 13.0x 2.6x 9.1% 18.2% 3.5% 50%