- You Have Just Been Hired As A Financial Analyst For Lydex Company A Manufacturer Of Safety Helmets Your Boss Has Asked 1 (134.49 KiB) Viewed 11 times
You have just been hired as a financial analyst for Lydex
Company, a manufacturer of safety helmets. Your boss has asked you to perform a comprehensive analysis of the
company's financial statements, including comparing Lydex's performance to its major competitors. The
company's financial statements for the last two years are as follows: Assets Current assets: Cash Marketable securities. Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 10% Total liabilities Lydex
Company Comparative Balance Sheet Stockholders' equity: Common stock, $75 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Sales (all on account) Cost of goods sold Gross margin Selling and administrative expenses. Net operating income Interest expense Net income before taxes Income taxes (30%) Net income Common dividends Net income retained Beginning retained earnings Ending retained earnings Current ratio Acid-test ratio. Average collection period Average sale period Return on assets. Lydex
Company Comparative Income
Statement and Reconciliation This Year $ 15,800,000 12,640,000 3,160,000 1,998,000 1,162,000 Debt-to-equity ratio Times interest earned ratio Price-earnings ratio 2.3 1.0 40 days 60 days This Year 8.6% $ 900,000 2,460,000 3,540,000 0.7 5.9 10 250,000 7,150,000 9,400,000 $ 16,550,000 $ 3,950,000 3,620,000 7,570,000 7,500,000 1,480,000 8,980,000 7,500,000 1,200,000 8,700,000 $ 16,550,000 $ 14,580,000 362,000 362,000 800,000 240,000 560,000 280,000 280,000 Last Year 1,200,000 $ 1,480,000 $ 1,140,000 300,000 1,560,000 2,400,000 190,000 5,590,000 8,990,000 $ 14,580,000 $ 2,860,000 3,020,000 5,880,000 To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex
Company's industry: Last Year $ 12,980,000 9,735,000 3,245,000 1,580,000 1,665,000 302,000 502,000 1,363,000 408,900 954,100 477,050 477,050 722,950 $ 1,200,000
Problem 14-15 Part 2 (Algo) 2. You decide next to assess the
company's stock market performance. Assume that Lydex's stock price at the end of this year is $82 per share and that at the end of last year it was $50. For both this year and last year, compute: (Round your "Percentage" answers to 1 decimal place and other intermediate and final answers to 2 decimal places.) a. The earnings per share. b. The dividend yield ratio. c. The dividend payout ratio. d. The price-earnings ratio. e. The book value per share of common stock. a. The earnings per share b. The dividend yield ratio c. The dividend payout ratio d. The price-earnings ratio e. The book value per share of common stock This Year % % Last Year % %
Problem 14-15 Part 3 (Algo) 3. You decide, finally, to assess the
company's liquidity and asset management. For both this year and last year, compute: a. Working capital. b. The current ratio. (Round your final answers to 2 decimal places.) c. The acid-test ratio. (Round your final answers to 2 decimal places.) d. The average collection period. (The accounts receivable at the beginning of last year totaled $1,610,000.) (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) e. The average sale period. (The inventory at the beginning of last year totaled $1,970,000.) (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) f. The operating cycle. (Round your intermediate calculations and final answers to 2 decimal place.) g. The total asset turnover. (The total assets at the beginning of last year totaled $13,010,000.) (Round your final answers to 2 decimal places.) a. Working capital b. The current ratio c. The acid-test ratio d. The average collection period e. The average sale period f. The operating cycle g. The total asset turnover This Year days days days Last Year days days days