Question

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

1. 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 1