Data for Lozano Chip Company and its industry averages follow. Lozano Chip Company: Balance Sheet as of December 31, 2019 (Thousands of Dollars) Cash $ 220,000 Accounts payable $ 600,000 Receivables 1,575,000 Notes payable 100,000 Inventories 1,150,000 Other current liabilities 525,000 Total current assets $2,945,000 Total current liabilities $1,225,000 Net fixed assets 1,325,000 Long-term debt 400,000 Common equity 2,645,000 Total assets $4,270,000 Total liabilities and equity $4,270,000 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 Net income $ 121,500 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 % 1.2 % Net income/Total assets % 3.6 % Net income/Common equity % 9.0 % Total debt/Total assets % 10.0 % Total liabilities/Total assets % 60.0 % 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 %. Outline Lozano's strengths and weaknesses as revealed by your analysis.
Data for Lozano Chip Company and its industry averages follow. Lozano Chip Company: Balance Sheet as of December 31, 2019 (Thousands of Dollars) Cash $ 220,000 Accounts payable $ 600,000 Receivables 1,575,000 Notes payable 100,000 Inventories 1,150,000 Other current liabilities 525,000 Total current assets $2,945,000 Total current liabilities $1,225,000 Net fixed assets 1,325,000 Long-term debt 400,000 Common equity 2,645,000 Total assets $4,270,000 Total liabilities and equity $4,270,000 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 Net income $ 121,500 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 % 1.2 % Net income/Total assets % 3.6 % Net income/Common equity % 9.0 % Total debt/Total assets % 10.0 % Total liabilities/Total assets % 60.0 % 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 %. Outline Lozano's strengths and weaknesses as revealed by your analysis.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Data for Lozano Chip Company and its industry averages follow.
| Lozano Chip Company: (Thousands of Dollars) |
||||
| Cash | $ 220,000 | Accounts payable | $ 600,000 | |
| Receivables | 1,575,000 | Notes payable | 100,000 | |
| Inventories | 1,150,000 | Other current liabilities | 525,000 | |
| Total current assets | $2,945,000 | Total current liabilities | $1,225,000 | |
| Net fixed assets | 1,325,000 | Long-term debt | 400,000 | |
| Common equity | 2,645,000 | |||
| Total assets | $4,270,000 | Total liabilities and equity | $4,270,000 |
| 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 |
| Net income | $ 121,500 |
- 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 % 1.2 % Net income/Total assets % 3.6 % Net income/Common equity % 9.0 % Total debt/Total assets % 10.0 % Total liabilities/Total assets % 60.0 % - 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 %.
-
Outline Lozano's strengths and weaknesses as revealed by your analysis.
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