Comprehensive Ratio AnalysisData 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$ 600,000Receivables1,575,000 Notes payable100,000Inventories1,135,000 Other current liabilities560,000 Total current assets$2,950,000 Total current liabilities$1,260,000Net fixed assets1,315,000 Long-term debt400,000 Common equity2,605,000Total assets$4,265,000 Total liabilities and equity$4,265,000 Lozano Chip Company: Income Statement for Year Ended December 31, 2019(Thousands of Dollars)Sales$7,500,000Cost of goods sold6,375,000Selling, general, and administrative expenses943,000 Earnings before interest and taxes (EBIT)$ 182,000Interest expense40,000 Earnings before taxes (EBT)$ 142,000Federal and state income taxes (25%)35,500Net income$ 106,500 RatioLozanoIndustry AverageCurrent assets/Current liabilities2.342.0Days sales outstanding (365-day year)76.65 days35.0 daysCOGS/Inventory5.616.7Sales/Fixed assets5.712.1Sales/Total assets1.753.0Net income/Sales1.42%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%p. Use the extended DuPont equation to calculate ROE for both Lozano and the industry. Do not roundintermediate calculations. Round your answers to two decimal places.For the firm, ROE is%.For the industry, ROE is%.

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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	$ 240,000	Accounts payable	$ 600,000
Receivables	1,575,000	Notes payable	100,000
Inventories	1,135,000	Other current liabilities	560,000
Total current assets	$2,950,000	Total current liabilities	$1,260,000
Net fixed assets	1,315,000	Long-term debt	400,000
		Common equity	2,605,000
Total assets	$4,265,000	Total liabilities and equity	$4,265,000

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	943,000
Earnings before interest and taxes (EBIT)	$ 182,000
Interest expense	40,000
Earnings before taxes (EBT)	$ 142,000
Federal and state income taxes (25%)	35,500
Net income	$ 106,500

Ratio
Lozano
Industry Average
Current assets/Current liabilities
2.34
2.0
Days sales outstanding (365-day year)
76.65 days
35.0 days
COGS/Inventory
5.61
6.7
Sales/Fixed assets
5.7
12.1
Sales/Total assets
1.75
3.0
Net income/Sales
1.42
%
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%
p. 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
%.

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