Module 2 - End of Chapter Assignment Chapter 027 Chapter 03 Lozano Chip Company: Balance Sheet as of December 31, 2019 (Thousands of Dollars) Cash $ 240,000 Accounts payable Receivables 1,575,000 Notes payable Inventories 1,125,000 Other current liabilities Total current assets $2,940,000 Total current liabilities Net fixed assets 1,315,000 Long-term debt Common equity Total assets $4,255,000 Total liabilities and equity $ 600,000 100,000 530,000 $1,230,000 400,000 2,625,000 $4,255,000 dowe 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 923,000 Earnings before interest and taxes (EBIT) 202,000 Interest expense 40,000 Earnings before taxes (EBT) $ 162,000 Federal and state income taxes (25%) 40,500 $ 121,500 Net income a. Calculate the indicated ratios for Lozano. Do not round Intermediate calculations. Round X a. Calculate the indicated ratios for Lozano. Do not round Intermediate calculations. Round your answers to two decimal places Ratio Lozano Industry Average Current assets/Current liabilities 2.0 Days sales outstanding (365-day year) days 35.0 days COGS/Inventory 6.7 Sales/Fixed assets 12.1 Sales/Total assets 3.0 Net Income/Sales 1290 Net Income/Total assets 3.6% Net income/Common equity 9.09 Total debt/Total assets 100% Total liabilities/Total assets 60.0% b. Use the extended Dupont equation to calculate Roe for both Lozano and the industry. Do not round intermediate calculations. Round your answers to two decimal places. For the firm, ROE is For the industry, ROE IS 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 choice. creditor enforce tv stringent collection policy 96 voor both The total assets turnover ratio is well Select the industry average so sales should be select assets Sect While the communithan that the 9:45 PM 205/22 Hier Chapter 027 Chapter 03 0 x Net income/Total assets 3.6% Net Income/Common equity % 9.0% Total debt/Total assets 10.0% Total liabilities/Total assets 96 60.0% b. Use the extended DuPont equation to calculate ROE for both Lozano and the industry. Do not round intermediate calculations. Round your answers to two decimal places For the firm, ROE is %. For the industry, ROE IS %. 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 select creditor enforce a Select stringent collection policy The total assets turnover ratio is well Select the Industry average so sales should be select assets elec While the company's profit margin is Select than the industry average, its other profitability ratios are the best compared to the industry - net income should be select given the amount of equity and assets. S A-Z or both Save & Continue