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$)$

Lozano Chip Company: Income Statement for Year Ended December $31,2019$

$($Thousands of Dollars$)$

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

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

For the firm, ROE is

$\%.$

For the industry, ROE i:

$\%.$

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

$|$ credit or enforce a $|$

stringent collection policy.

The total assets turnover ratio is well

$|$ the industry average so sales should be

$,$ assets

$,$ or both.

While the company's profit margin is

than the industry average, its other profitability ratios are

compared to the industry $-$ net income should be $-$ Select$--1$ given the amount of equity and assets.