Construct the extended Du Pont equation for both Lozano and the industry.

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 $2,950,000 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

Ratio Lozano Industry Average

Current assets/Current liabilities __________ 2.0

Days sales outstanding (365-day year) __________ 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%