Data for Lozano Chip Company and its industry averages follow.

a. Calculate the indicated ratios for Lozano.

b. Construct the extended DuPont equation for both Lozano and the industry.

c. Outline Lozano?s strengths and weaknesses as revealed by your analysis.

Lozano Chip Company: Income Statement for Year Ended December 31, 2019(Thousands of Dollars)Sales ................................................................................................. ?$7,500,000Cost of goods sold ............................................................................. 6,375,000Selling, general, and administrative expenses .................................. 933,000Earnings before interest and taxes (EBIT) ...................................... $ 192,000Interest expense .................................................................................... ?40,000Earnings before taxes (EBT) ............................................................. $ 152,000Federal and state income taxes (25%) ................................................? 38,000Net income .......................................................................................? $ 114,000

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Lozano Chip Company: Balance Sheet as of December 31, 2019 (Thousands of Dollars) Cash Receivables Inventories Total current assets Net fixed assets Accounts payable Notes payable Other current liabilities Total current liabilities Long-term debt Common equity Total liabilities and equity $ 225,000 1,575,000 $ 600,000 100,000 525,000 $1,225,000 400,000 $2,925,000 1,350,000 2,650,000 $4,275,000 Total assets $4,275,000 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 10.0% Total liabilities/Total assets 35.0%