Data for Campsey Computer Company and its industry averages follow.

a. Calculate the indicated ratios for Campsey.

b. Construct the DuPont equation for both Campsey and the industry.

c. Outline Campsey's strengths and weaknesses as revealed by your analysis.

d. Suppose Campsey had doubled its sales as well as its inventories, accounts receivable, and common equity during 2012. How would that information affect the validity of your ratio analysis?

Campsey Computer Company:
Income Statement for Year Ended December 31, 2012
Sales........................................................................$ 1,607,500
Cost of goods sold........................................................( 1,353,000)
Gross profit..................................................................$ 254,500
Fixed operating expenses except depreciation.........................( 143,000)
Earnings before interest, taxes, depreciation,
and amortization (EBITDA)..............................................$ 111,500
Depreciation..................................................................( 41,500)
Earnings before interest and taxes (EBIT)................................$ 70,000
Interest........................................................................( 24,500)
Earnings before taxes (EBT)...............................................$ 45,500
Taxes (40%).................................................................( 18,200)
Net income....................................................................$ 27,300

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Campsey Computer Company: Balance Sheet as of December 31, 2012 Cash Receivables Inventories Total current assets Net fixed assets 129,000 84,000 117,000 $330,000 256,500 361,000 947,500 Total liabilities and equity 947,500 77,500 Accounts payable 336,000 Notes payable 241,500 Other current liabilities Total current liabilities Long-term debt Common equity $655,000 292,500 Total assets Industry Average Ratio Campsey Current ratio Days sales outstanding Inventory tumover Total assets turnover Net profit margin Return on assets (ROA) Return on equity (ROE) Debt ratio 2.0 35.0 days 5.6 × 3.0x 1.2% 3.6% 9.0% 60.6%