The Kretovich Company had a quick ratio of 1.4, a Current ratio of 3.0, a days s
ID: 2711119 • Letter: T
Question
The Kretovich Company had a quick ratio of 1.4, a Current ratio of 3.0, a days sales outstanding of 36.5 days (based on a 365-day year), total current assets of $810,000, and cash and marketable Securities of $120,000. What Were Kretovich's annual sales? Data for Lozano Chip Company and its industry averages follow. a. Calculate the indicated ratios for Lozano. b. Construct the extended Du Pont equation for both Lozano and the industry. c. Outline Lozano's Strengths and weaknesses as revealed by your analysis. Lozano Chip Company: Balance Sheet as of December 31, 2013 (Thousands Of Dollars)Explanation / Answer
Foloowing are the indicating Ratios:
Profitability Ratios:
Return on Equity (Before Income Tax)= [(Net Income for the Year Before Tax) / (Average of Owners Equity)] *100
= 188369/1752750
=11%
Return on Capital Employed (Before Income Tax)= [(Net Income for the Year Before Tax) / (Average of Total Owners Equity and Liabilities)] *100
= 188369/(1752750+1068750)*100
= 6.68%
Net Profit Margin (Before Income Tax) (%) =(Net Income for the Year Before Tax / Net Turnover)*100
= (188369/ 7,500,000)*100
=2.51%
Liquidity Ratios
Current Ratio= Current Assets/ Current Liabilities
=2,950,000/1,453,500
= 2
Quick Ratio=(Current Assets- Stocks) / (Short Term Liabilities)
=2,950,000/1,453,500
= 2
Cash Ratio=Cash /Short Term Liabilities
= 225,000/1,453,500
= .15
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