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) 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 Calculate the indicated ratios for Lozano. Round your answers to two decimal places. Ratio Lozano Industry Average Current assets/Current liabilities 2.0 Days sales outstanding* days 35.0 days COGS/Inventory 6.7
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) 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 Calculate the indicated ratios for Lozano. Round your answers to two decimal places. Ratio Lozano Industry Average Current assets/Current liabilities 2.0 Days sales outstanding* days 35.0 days COGS/Inventory 6.7
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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)
| 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 |
- Calculate the indicated ratios for Lozano. Round your answers to two decimal places.
Ratio Lozano Industry Average Current assets/Current liabilities 2.0 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. - 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 % - Outline Lozano's strengths and weaknesses as revealed by your analysis
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