60.1K

Verified Solution

Link Copied!

Comprehensive Ratio 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	1,155,000		Other current liabilities	540,000
Total current assets	$2,950,000		Total current liabilities	$1,240,000
Net fixed assets	1,325,000		Long-term debt	400,000
			Common equity	2,635,000
Total assets	$4,275,000		Total liabilities and equity	$4,275,000

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	929,000
Earnings before interest and taxes (EBIT)	$ 196,000
Interest expense	40,000
Earnings before taxes (EBT)	$ 156,000
Federal and state income taxes (25%)	39,000
Net income	$ 117,000

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
Days sales outstanding (365-day year)		35 days
COGS/Inventory		6.7
Sales/Fixed assets		12.1
Sales/Total assets		3
Net income/Sales	%	1.2 %
Net income/Total assets	%	3.6 %
Net income/Common equity	%	9 %
Total debt/Total assets	%	10 %
Total liabilities/Total assets	%	60%

Answer & Explanation Solved by verified expert

See Answer