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, 2013 (Thousands of
Comprehensive Ratio Analysis
Data for Lozano Chip Company and its industry averages follow.
Lozano Chip Company: Balance Sheet as of December 31, 2013 (Thousands of Dollars)
Cash | $ 225,000 | Accounts payable | $601,866 | |
Receivables | 1,575,000 | Notes payable | 326,634 | |
Inventories | 1,125,000 | Other current liabilities | 525,000 | |
Total current assets | $2,925,000 | Total current liabilities | $1,453,500 | |
Net fixed assets | 1,350,000 | Long-term debt | 1,068,750 | |
Common equity | 1,752,750 | |||
Total assets | $4,275,000 | Total liabilities and equity | $4,275,000 |
Lozano Chip Company: Income Statement for Year Ended December 31, 2013 (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 |
- Calculate the indicated ratios for Lozano. Round your answers to two decimal places.
Ratio Lozano Industry Average Current assets/Current liabilities 2.0 Days sales outstanding* 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 % 30.0% Total liabilities/Total assets % 60.0% *Calculation is based on a 365-day year. - Construct the extended Du Pont equation for both Lozano and the industry. Round your answers to two decimal places.
For the firm, ROE is % For the industry, ROE is % - Outline Lozano's strengths and weaknesses as revealed by your analysis
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