Question 3-17

a. Calculate the indicated ratios for Lozano. b. Construct the extended Du Pontequation for both Lozano and the industry. c, outline Lozano's strengths and weaknesses as revealed by your analysis. Lozano Chip Company: Balance Sheet as at December 31, 2015 Thousands of Dollars) 225,000 Accounts payable 601,866 Receivables 1,575,000 Notes payable 1,125,000 Other current liabilities Inventories 525,000 Total current assets 2,925,000 Total current liabilities 1,453,500 Net fixed assets 1,350,000 Long-term debt Common equity 1,752,750 Total assets $4,275,000 Total liabilities and equity $4.275,000 Dollars) $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 Taxes (30%) 56,511 131,858 Net income Industry Average Ratio Lozano Current assets/Current liabilities 20 x Days sales outstanding (365-day year0 350 days 6.7 X Sales/Fixed assets 12.1 x 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%