Comprehensive Ratio Analysis

Data for Lozano Chip Company and its industry averages follow.

Lozano Chip Company: Balance Sheet as of December $31,2016($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 $31,2016($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

$2\mathrm{.}0$

Days sales outstanding$*$

days $35\mathrm{.}0$ days

COGS$/$Inventory

$6\mathrm{.}7$

Sales$/$Fixed assets

$12\mathrm{.}1$

Sales$/$Total assets

$3\mathrm{.}0$

Net income$/$Sales

$\%1\mathrm{.}2\%$

Net income$/$Total assets

$\%3\mathrm{.}6\%$

Net income$/$Common equity

$\%9\mathrm{.}0\%$

Total debt$/$Total assets

$\%30\mathrm{.}0\%$

Total liabilities$/$Total assets

$\%60\mathrm{.}0\%$

$*$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