Please help explain how to solve:

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$240,000 Accounts payable$600,000

Receivables 1,575,000 Notes payable 100,000

Inventories 1,115,000 Other current liabilities 555,000

Total current assets $2,930,000 Total current liabilities $1,255,000

Net fixed assets 1,330,000 Long-term debt 400,000

Common equity 2,605,000

Total assets$4,260,000 Total liabilities and equity$4,260,000

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 921,000

Earnings before interest and taxes (EBIT)$204,000

Interest expense 40,000

Earnings before taxes (EBT)$164,000

Federal and state income taxes (25%)41,000

Net income$123,000

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 2.0

Days sales outstanding (365-day year) days 35.0days

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 % 60.0%

2. 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%.