Lenox Industrial Ceramics manufactures and sells high performance ceramics used in jet engines, wind turbines, and other industrial applications. 2018-2020 summary financial data are shown below Lennox Industrial Ceramics ($s in 000s except for per share data) Consolidated Income Statement for Year Ending 12/31202020192018 Sales$118,255$115,450$112,500 Cost of Goods Sold$55,400$58,430$61,875 Gross Profit$62,855$57,020$50,625 Operating Expenses$39,450$36,250$35,500 Goodwill Write Off $12,175 Operating Profit$23,405$8,595$15,125 Interest Expense$1,350$1,170$725 Income Before Tax$22,055$7,425$14,400 Taxes$2,220$955$2,165 Net Income$19,835$6,470$12,235 EBITDA$24,940$21,930$17,400 Shares Outstanding (millions)7,6208,60010,600 Earnings Per Share$2.60$0.75$1.15 Dividends Per Share$1.55$1.45$0.75 Share Price (12/31)$47.55$31.25$20.65 Balance Sheet As of 12/31202020192018 Current Assets$42,255$41,750$40,500 Long Term Assets $50,755$48,025$58,200 Total Assets$93,010$89,775$98,700 Current Liabilties$18,950$18,745$20,325 Long-Term Debt$42,535$32,930$21,365 Equity$31,525$38,100$57,010 Liabilities + Equity$93,010$89,775$98,700 Part A (i) According to Lenox's 10K, industrial ceramics prices declined an average of 3.0%/year for the last two years. What does Lenox's sales and gross profit margin for 2018 - 2020 suggest about Lenox's responseto declining prices? (ii) In addition to sales and gross profit what else affected Lenox's net income and net income margin?

The analysis of differential statement providers with the cause of all the financial decisions and the variables that are most volatile .When the prices of good sold or input process are declining as a result of which gross profit margin are increasing because the sales revenue or generating higher profit as the sales number are also higher so increasing sales and decreasing cost of good sold result into higher cross profit margin as a result of which the property ability in terms of Gross margin or higher . The operating expenses are increasing but due to larger size. As the size of operations in area are increasing . The operating profit and also increasingas well as income before tax and net income of form or increasing from previous year because interportion to the total sales the expenses are less so the formation better position from the previous year and have greater profitability when considering the net profit as well because all the cost are in control.

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Lenox Industrial Ceramics manufactures and sells high performance ceramics used
in jet engines, wind turbines, and other industrial applications.
2018-2020 summary financial data are shown below

	Lennox Industrial Ceramics
($s in 000s except for per share data)

	Consolidated Income Statement

for Year Ending 12/31	2020	2019	2018

Sales	$118,255	$115,450	$112,500

Cost of Goods Sold	$55,400	$58,430	$61,875
Gross Profit	$62,855	$57,020	$50,625

Operating Expenses	$39,450	$36,250	$35,500
Goodwill Write Off		$12,175
Operating Profit	$23,405	$8,595	$15,125

Interest Expense	$1,350	$1,170	$725
Income Before Tax	$22,055	$7,425	$14,400

Taxes	$2,220	$955	$2,165

Net Income	$19,835	$6,470	$12,235

EBITDA	$24,940	$21,930	$17,400

Shares Outstanding (millions)	7,620	8,600	10,600

Earnings Per Share	$2.60	$0.75	$1.15

Dividends Per Share	$1.55	$1.45	$0.75

Share Price (12/31)	$47.55	$31.25	$20.65

	Balance Sheet
As of 12/31	2020	2019	2018

Current Assets	$42,255	$41,750	$40,500
Long Term Assets	$50,755	$48,025	$58,200
Total Assets	$93,010	$89,775	$98,700

Current Liabilties	$18,950	$18,745	$20,325
Long-Term Debt	$42,535	$32,930	$21,365
Equity	$31,525	$38,100	$57,010
Liabilities + Equity	$93,010	$89,775	$98,700


Part A

(i) According to Lenox's 10K, industrial ceramics prices declined an average of 3.0%/year
for the last two years.

What does Lenox's sales and gross profit margin for 2018 - 2020 suggest about Lenox's response
to declining prices?









(ii) In addition to sales and gross profit what else affected Lenox's net income and net income margin?

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