Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

can you do parts a-c Comprehensive Ratio Analysis Data for Lozano Chip Company and its industry averages follow. Lozano Chip Company: Balance Sheet as of

can you do parts a-c
image text in transcribed
image text in transcribed
Comprehensive Ratio Analysis Data for Lozano Chip Company and its industry averages follow. Lozano Chip Company: Balance Sheet as of December 31, 2021 (Thousands of Dollars) Cash Receivables Inventories Total current assets Net fixed assets $225,000 1,575,000 1,150,000 $2,950,000 1,335,000 $4,285,000 Total assets Lozano Chip Company: Income Statement for Year Ended December 31, 2021 (Thousands of Dollars) Accounts payable Notes payable Other current liabilities. Total current liabilities. Long-term debt Common equity Total liabilities and equity Sales Cost of goods sold Selling, general, and administrative expenses Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Federal and state income taxes (25%) Net income Ratio Current assets/Current liabilities Days sales outstanding (365-day year) COGS/Inventory $ 600,000 100,000 515,000 $1,215,000 400,000 2,670,000 $4,285,000 Lozano a. Calculate the indicated ratios for Lozano. Do not round intermediate calculations. Round your answe places. days $7,500,000 6,375,000 943,000 $ 182,000 40,000 $ 142,000 35,500 $ 106,500 Industry Average 2.0 35.0 days 6.7 HW 2: EOC 7 Problems: a. Calculate the indicated ratios for Lozano. Do not round intermediate calculations. Round your answers to two decimal places. Ratio Current assets/Current liabilities Days sales outstanding (365-day year) COGS/Inventory Sales/Fixed assets Sales/Total assets Net income/Sales Net income/Total assets Net income/Common equity Total debt/Total assets Total liabilities/Total assets Lozano days % % % % % Industry Average 2.0 35.0 days 6.7 12.1 3.0 1.2% 3.6% 9.0% 10.0% 60.0% b. Use the extended DuPont equation to calculate ROE for both Lozano and the industry. Do not round intermediate calculations. Round your answers to two decimal places. For the firm, ROE is %. For the industry, ROE is %. c. Outline Lozano's strengths and weaknesses as revealed by your analysis. The firm's days sales outstanding is more than twice as long as the industry average, indicating that the firm should -Select- credit or enforce a -Select-stringent collection policy. The total assets turnover ratio is well -Select- the industry average so sales should be -Select- 0 assets -Select-o, or both. While the company's profit margin is-Select-o than the industry average, its other profitability ratios are -Select-o compared to the industry net income should be -Select-given the amount of equity and assets

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Handbook Of Environmental And Sustainable Finance

Authors: Vikash Ramiah, Greg N. Gregoriou

1st Edition

012803615X, 978-0128036150

More Books

Students also viewed these Finance questions

Question

3. Explain the forces that influence how people handle conflict

Answered: 1 week ago