Lenox Industrial Ceramics manufactures and sells high performance ceramics used in jet engines, wind turbines, and other industrial applications. 2018-2020 summary financial data are shown below Lennox Industrial Ceramics ($s in 000s except for per share data) Consolidated Income Statement for Year Ending 12/31202020192018 Sales$118,255$115,450$112,500 Cost of Goods Sold$55,400$58,430$61,875 Gross Profit$62,855$57,020$50,625 Operating Expenses$39,450$36,250$35,500 Goodwill Write Off $12,175 Operating Profit$23,405$8,595$15,125 Interest Expense$1,350$1,170$725 Income Before Tax$22,055$7,425$14,400 Taxes$2,220$955$2,165 Net Income$19,835$6,470$12,235 EBITDA$24,940$21,930$17,400 Shares Outstanding (millions)7,6208,60010,600 Earnings Per Share$2.60$0.75$1.15 Dividends Per Share$1.55$1.45$0.75 Share Price (12/31)$47.55$31.25$20.65 Balance Sheet As of 12/31202020192018 Current Assets$42,255$41,750$40,500 Long Term Assets $50,755$48,025$58,200 Total Assets$93,010$89,775$98,700 Current Liabilties$18,950$18,745$20,325 Long-Term Debt$42,535$32,930$21,365 Equity$31,525$38,100$57,010 Liabilities + Equity$93,010$89,775$98,700 Part A (i) According to Lenox's 10K, industrial ceramics prices declined an average of 3.0%/year for the last two years. What does Lenox's sales and gross profit margin for 2018 - 2020 suggest about Lenox's responseto declining prices? (ii) In addition to sales and gross profit what else affected Lenox's net income and net income margin?

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Lenox Industrial Ceramics manufactures and sells high performance ceramics used
in jet engines, wind turbines, and other industrial applications.
2018-2020 summary financial data are shown below

	Lennox Industrial Ceramics
($s in 000s except for per share data)

	Consolidated Income Statement

for Year Ending 12/31	2020	2019	2018

Sales	$118,255	$115,450	$112,500

Cost of Goods Sold	$55,400	$58,430	$61,875
Gross Profit	$62,855	$57,020	$50,625

Operating Expenses	$39,450	$36,250	$35,500
Goodwill Write Off		$12,175
Operating Profit	$23,405	$8,595	$15,125

Interest Expense	$1,350	$1,170	$725
Income Before Tax	$22,055	$7,425	$14,400

Taxes	$2,220	$955	$2,165

Net Income	$19,835	$6,470	$12,235

EBITDA	$24,940	$21,930	$17,400

Shares Outstanding (millions)	7,620	8,600	10,600

Earnings Per Share	$2.60	$0.75	$1.15

Dividends Per Share	$1.55	$1.45	$0.75

Share Price (12/31)	$47.55	$31.25	$20.65

	Balance Sheet
As of 12/31	2020	2019	2018

Current Assets	$42,255	$41,750	$40,500
Long Term Assets	$50,755	$48,025	$58,200
Total Assets	$93,010	$89,775	$98,700

Current Liabilties	$18,950	$18,745	$20,325
Long-Term Debt	$42,535	$32,930	$21,365
Equity	$31,525	$38,100	$57,010
Liabilities + Equity	$93,010	$89,775	$98,700


Part A

(i) According to Lenox's 10K, industrial ceramics prices declined an average of 3.0%/year
for the last two years.

What does Lenox's sales and gross profit margin for 2018 - 2020 suggest about Lenox's response
to declining prices?









(ii) In addition to sales and gross profit what else affected Lenox's net income and net income margin?

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