4-24 DuPON'I' ANALYSIS A rm has been experiencing low protability in recent years. Perform an analysis of the rm's nancial position using the DuPont...

DuPONT ANALYSIS

A firm has been experiencing low profitability in recent years. Perform an analysis of the firm’s financial position using the DuPont equation. The firm has no lease payments but has a $2 million sinking fund payment on its debt. The most recent industry average ratios and the firm’s financial statements are as follows:

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4-24 DuPON'I' ANALYSIS A ﬁrm has been experiencing low proﬁtability in recent years. Perform an analysis of the ﬁrm’s ﬁnancial position using the DuPont equation. The ﬁrm hasno lease payments but has a $2 million sinking fund payment on its debt. The most recentindustry average ratios and the firm’s ﬁnancial statements are as follows: Industry Average RatiosCurrent ratio 3 x Fixed assets turnoverDebt-to-capital ratio 20% Total assets turnoverTimes interest earned 7x Proﬁt marginEBITDA coverage 9x Return on total assetsInventory turnover 10x Return on common equityDays sales outstandinga 24 days Return on irwested capital “Calculation is based on a 365-day year. Balance Sheet: of December 31 . 2018 (“lions of Del-rs] Cash and equivalents $ 78Accounts receivable 66Inventories E Total current assets $303Gross ﬁxed assets 225 [as depreciation _78Net fixed assets MTotal assets ﬂ Accounts payableOther current liabilitiesNotes payable Total current liabilitiesLong-term debt Total liabilitiesCommon stock Total stockholders' equityTotal liabilities and equity $451129$55 $135 114Ew$450