Refer to the statement. Compute ROE for both 2017 and 2016. Use DuPont Analysis to check for the problem of lower ROE year.

Balance Sheet: 12/31/17 Assets 2016 2017 1040 Cash and Marketable Securities 130 4095 4875 Accounts Receivable 5395 7995 Inventories 10530 13000 Total Current Assets 13000 11310 Net plant and equipment 21840 26000 TOTAL ASSETS 2016 2017 Liabilities and Equity Accounts Payable Notes Payable Accruals 520 780 780 1820 1690 1430 2990 4030 Total Current Liabilities 7540 9802 Long Term Bonds TOTAL DEBT 10530 13832 520 520 Preferred Stock 1690 1690 Common Stock 9100 9958 Retained earnings TOTAL COMMON EQUITY 10790 21840 11648 26000 TOTAL LIABILITIES AND EQUITY 2016 2017 Income Statement: 12/31/17 37050 41600 Net Sales 32461 35100 Operating Costs (excludes Dep/Amortization) 4589 6500 EBITDA 1170 1300 Depreciation Amortization 1170 1300 Depreciation and Amortization 3419 5200 EBIT 780 1144 Less Interest 2639 4056 EBT 105.56 1622.4 Taxes (40%) NET INCOME (before Preferred Dividends) 1583.4 2433.6 52 52 Preferred Dividends 1531.4 2381.6 NET INCOME 689 1521 Common Dividends 842.4 860.6 Addition to Retained Earnings