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(3-13) Data for Lozano Chip Company and its indus...

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(3-13) Data for Lozano Chip Company and its industry averages follow. a. Calculate the indicated ratios for Lozano. b. Construct the extended Du Pont equation for both Lozano and the industry. c. Outline Lozano?s strengths and weaknesses as revealed by your analysis. Lozano Chip Company: Balance Sheet as of December 31, 2013 (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 $2,950,000 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, 2013 (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 Ratio Lozano Industry Average Current assets/Current liabilities __________ 2.0 Days sales outstanding (365-day year) __________ 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%

 

Paper#5498 | Written in 18-Jul-2015

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