a$.$ Calculate the indicated ratios for Lozano. Do not round intermediate calculations. Round your answers to two decimal places. Lozano Chip Company: Balance Sheet as of December $31,2019$

Lozano Chip Company: Income Statement for Year Ended December $31,2019$

$($Thousands of Dollars$)$

a$.$ Calculate the indicated ratios for Lozano. Do not round intermediate calculations. Round your answers to two decimal places.

Ratio

Current assets$/$Current liabilities

Days sales outstanding $(365-$day year$)$

COGS$/$Inventory

Sales$/$Fixed assets

Sales$/$Total assets

Net income$/$Sales

Net income$/$Total assets

Net income$/$Common equity

Total debt$/$Total assets

Total liabilities$/$Total assets

Lozano

$\%$

$\%$

$\%$

$\%$

$\%$

Industry Average

$2\mathrm{.}0$

$35\mathrm{.}0$ days

$6\mathrm{.}7$

$12\mathrm{.}1$

$3\mathrm{.}0$

$1\mathrm{.}2\%$

$3\mathrm{.}6\%$

$9\mathrm{.}0\%$

$10\mathrm{.}0\%$

$60\mathrm{.}0\%$

b$.$ Use the extended DuPont equation to calculate ROE for both Lozano and the industry. Do not round intermediate calculations. Round your answers to two decimal places.

For the firm, ROE is

$\%.$

For the industry, ROE is

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

The firm's days sales outstanding is more than twice as long as the industry average, indicating that the firm should

$-$Select$-$

credit or enforce a

stringent

collection policy.

The total assets turnover ratio is well

the industry average so sales should be

$,$ assets

$,$ or both.

While the company's profit margin is

than the industry average, its other profitability ratios are

compared to the industry $-$ net income should be

$-$Select$-$

given the amount of equity and assets.