Use the following information to answer the questions that follow.

a. Use the DuPont system to compare the two heavy metal companies shown above (HMM and MS) during 2012. Which of the two has a higher return on common equity? What is the cause of the difference between the two?
b. Calculate the return on common equity of the software company, HTS. Why is this value so different from those of the heavy metal companies calculated in part a.?
c. Compare the leverage levels between the industries. Which industry receives a greater contribution from return on total assets? Which industry receives a greater contribution from the financial leverage as measured by the assets-to-equity ratio?
d. Can you make a meaningful DuPont comparison across industries? Why or why not?

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Income Statements For the Year Ended December 31, 2012 Heavy Metal Manufacturing High-Tech Software (HMM) $75,000,000 65.000.000 $10,000,000 3.000.000 7,000,000 2,800.000 Metallic Stamp- ing Inc. MS) $50,000,000 40,000,000 $10,000,000 3.000.000 $7,000,000 2.800.000 $ 4 200.000 Co. (HTS) $100,000,000 Sales Operating expenses Operating profit - Interest expenses Eamings before taxes - Taxes Net income 60,000,000 $ 40,000,000 S 40,000,000 16,000,000 Balance Sheet As of December 31,2012 Heavy Metal Metallic Stamping High-Tech Soft ware Co. (HTS) S 20,000,000 80,000.000 Manufacturing (HIM) $10,000,000 90,000.000 Inc. MS) 5,000,000 75,000,000 Current assets Net fixed assets Total assets Current liabilities Long-term debt Total liabilities Common stock Retained earnings 20,000,000 40,000,000 60,000.000 $ 15,000,000 25,000,000 mon equity 40,000.000 $10,000,000 40,000.000 S 10,000,000 350,000.000 10,000.000 $10,000,000 20.000.000 $30,000,000 25,000,000 65,000,000 90,000,000 Total liabilities and common equity