Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Comprehensive Ratio Analysis Data for Lozano Chip Company and its industry averages follow. Lozano Chip Company: Balance Sheet as of December 31, 2019 (Thousands of
Comprehensive Ratio Analysis
Data for Lozano Chip Company and its industry averages follow.
Lozano Chip Company: Balance Sheet as of December 31, 2019 (Thousands of Dollars) | ||||
Cash | $ 235,000 | Accounts payable | $ 600,000 | |
Receivables | 1,575,000 | Notes payable | 100,000 | |
Inventories | 1,130,000 | Other current liabilities | 560,000 | |
Total current assets | $2,940,000 | Total current liabilities | $1,260,000 | |
Net fixed assets | 1,360,000 | Long-term debt | 400,000 | |
Common equity | 2,640,000 | |||
Total assets | $4,300,000 | Total liabilities and equity | $4,300,000 |
Lozano Chip Company: Income Statement for Year Ended December 31, 2019 (Thousands of Dollars) | |
Sales | $7,500,000 |
Cost of goods sold | 6,375,000 |
Selling, general, and administrative expenses | 927,000 |
Earnings before interest and taxes (EBIT) | $ 198,000 |
Interest expense | 40,000 |
Earnings before taxes (EBT) | $ 158,000 |
Federal and state income taxes (25%) | 39,500 |
Net income | $ 118,500 |
- Calculate the indicated ratios for Lozano. Do not round intermediate calculations. Round your answers to two decimal places.
Ratio Lozano Industry Average Current assets/Current liabilities 2.0 Days sales outstanding (365-day year) days 35.0 days COGS/Inventory 6.7 Sales/Fixed assets 12.1 Sales/Total assets 3.0 Net income/Sales % 1.2 % Net income/Total assets % 3.6 % Net income/Common equity % 9.0 % Total debt/Total assets % 10.0 % Total liabilities/Total assets % 60.0 % - 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 %.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started