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	$ 220,000		Accounts payable	$ 600,000
Receivables	1,575,000		Notes payable	100,000
Inventories	1,155,000		Other current liabilities	540,000
Total current assets	$2,950,000		Total current liabilities	$1,240,000
Net fixed assets	1,325,000		Long-term debt	400,000
			Common equity	2,635,000
Total assets	$4,275,000		Total liabilities and equity	$4,275,000

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	929,000
Earnings before interest and taxes (EBIT)	$ 196,000
Interest expense	40,000
Earnings before taxes (EBT)	$ 156,000
Federal and state income taxes (25%)	39,000
Net income	$ 117,000

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 (slacken/tighten) credit or enforce a (more/less) stringent collection policy.

The total assets turnover ratio is well (above/below) the industry average so sales should be (decrease/increase) , assets (decrease/increase) , or both.

While the company's profit margin is (higher/lower) than the industry average, its other profitability ratios are (high/low) compared to the industry - net income should be (higher/lower) given the amount of equity and assets.