Problem 3-13 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 Accounts payable Notes payable Receivables Inventories $ 225,000 1,575,000 1,125,000 $2,925,000 1,350,000 Other current liabilities Total current assets Total current liabilities $601,866 326,634 525,000 $1,453,500 1,068,750 1,752,750 $4,275,000 Net fixed assets Long-term debt Common equity Total liabilities and equity Total assets $4,275,000 Lozano Chip Company: Income Statement for Year Ended December 31, 2016 (Thousands of Dollars) Sales Cost of goods sold Selling, general, and administrative expenses Earnings before interest and taxes (EBIT) $7,500,000 6,375,000 825,000 $ 300,000 111,631 Interest expense $ 188,369 Earnings before taxes (EBT) Federal and state income taxes (40%) 75,348 Net income $ 113,022 a. Calculate the indicated ratios for Lozano. Round your answers to two decimal places. Ratio Lozano Industry Average Current assets/Current 2.0 liabilities Days sales outstanding* days 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% *Calculation is based on a 365-day year. b. 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 % c. Outline Lozano's strengths and weaknesses as revealed by your analysis blank