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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% |
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