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 $ 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) $7,500,000 6,375,000 825,000 Sales Cost of goods sold Selling, general, and administrative expenses Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Federal and state income taxes (40%) $ 300,000 111,631 $ 188,369 75,348 113,022 Net income $ a. Calculate the indicated ratios for Lozano. Round your answers to two decimal places. Ratio Lozano Industry Average Current assets/Current liabilities Days sales outstanding* days 35.0 days 2.0 COGS/Inventory 6.7 Sales/Fixed assets Sales/Total assets Net income/Sales Net income/Total assets 12.1 3.0 1.2% 3.6% 9.0% 30.0% 60.0% Net income/Common equity Total debt/Total assets Total liabilities/Total assets *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 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 $ 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) $7,500,000 6,375,000 825,000 Sales Cost of goods sold Selling, general, and administrative expenses Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Federal and state income taxes (40%) $ 300,000 111,631 $ 188,369 75,348 113,022 Net income $ a. Calculate the indicated ratios for Lozano. Round your answers to two decimal places. Ratio Lozano Industry Average Current assets/Current liabilities Days sales outstanding* days 35.0 days 2.0 COGS/Inventory 6.7 Sales/Fixed assets Sales/Total assets Net income/Sales Net income/Total assets 12.1 3.0 1.2% 3.6% 9.0% 30.0% 60.0% Net income/Common equity Total debt/Total assets Total liabilities/Total assets *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
