Data for Lozano Chip Company and its industry averages follow. a. Calculate the indicated ratios for Lozano.

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Data for Lozano Chip Company and its industry averages follow.

a. Calculate the indicated ratios for Lozano.

b. Construct the extended Du Pont equation for both Lozano and the industry.

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

d. Suppose Lozano 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?

lozano Chip Company: Balance sheet as of December 31, 2012

(Thousands of Dollars)

Data for Lozano Chip Company and its industry averages follow.
a.

lozano Chip Company: Income statement for year Ended December 31,
2012 (Thousands of Dollars)
Sales.......................................................................................$ 7,500,000
Cost of goods sold.........................................................................6,375,000
Selling, general, and administrative expenses.............................................825,000
Earnings before interest and taxes (EBIT) .............................................$ 300,000
Interest expense...............................................................................111,631
Earnings before taxes (EBT) .............................................................$ 188,369
Federal and state income taxes (40%)......................................................75,348
Net income..................................................................................$ 113,022

Data for Lozano Chip Company and its industry averages follow.
a.

aCalculation is based on a 365-day year.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Related Book For  book-img-for-question

Intermediate Financial Management

ISBN: 978-1111530266

11th edition

Authors: Eugene F. Brigham, Phillip R. Daves

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