1 Part 1 of 3 3.33 points Required information [The following information applies to the questions displayed below] 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 Prim References Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net. Total assets Lydex Company Comparative Balance Sheet This Year Last Year $940,000 Liabilities and Stockholders' Equity Liabilities: Corrent liabilities Note payable, 10% Total Liabilities Stockholders equity: Common stock, $75 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 2,620,000 3,580,000 250,000 7,390,000 9,480,000 $ 16,870,000 $ 3,990,000 3,660,000 7,650,000 7,500,000 1,720,000 9,220,000 $ 16,870,000 $ 1,180,000 300,000 1,720,000 2,300,000 190,000 5,690,000 9,030,000 $ 14,720,000 $ 2,940,000 3,060,000 6,000,000 7,500,000 1,220,000 8,720,000 $ 14,720,000 1 Part 1 of 3 333 P Lydex Company Comparative Income Statement and Reconciliation Sales fall on account) This Year $ 15,840,000 12,672,000 3,168,000 Last Year $ 13,300,000 10,035,000 3,345,000 Cast of goods sold Gross margin Selling and administrative expenses Net operating incone Interest expense Net incone before taxes Income taxes (305) Net Incone Common dividends Net income retained Beginning retained earnings Ending retained earnings 1,692,000 1,566,000 366,000 1,596,000 1,749,000 306,000 1,200,000 360,000 1,443,000 $40,000 340,000 432,908 1,010,108 505,0se 500,000 ses, ese 1,220,000 714,950 $1,720,000 $1,220,000 To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry Current ratio 2.4 Average sale period Acid-test ratio Average collection period Return on assets Debt-to-equity ratio Price-earnings ratio 40 days 60 days 9.18 0.7 Times Interest earned ratio 5.7 10 Required: 1. You decide first to assess the company's performance in terms of debt management and profitability. Compute the following for both this year and last year: (Round your "Percentage" answers to 1 decimal place and other answers to 2 decimal places.) a. The times interest earned ratio. b. The debt-to-equity ratio. The gross margin percentage. d. The return on total assets. (Total assets at the beginning of last year were $13,050,000) e. The return on equity (Stockholders' equity at the beginning of last year totaled $8,214,950. There has been no change in common stock over the last two years.) t is the company's financial leverage positive or negative? Che Average Luttes civil per Average sale period Return on assets Debt-to-equity ratio unys 60 days 9.19 0.7 11 of 3 Times interest earned ratio Price-earnings ratio 5.7 10 lope Whit wrences Required: 1. You decide first to assess the company's performance in terms of debt management and profitability. Compute the following for both this year and last year: (Round your "Percentage" answers to 1 decimal place and other answers to 2 decimal places.) a. The times interest earned ratio. b. The debt-to-equity ratio.. c. The gross margin percentage. d. The return on total assets. (Total assets at the beginning of last year were $13,050,000.) e. The return on equity. (Stockholders' equity at the beginning of last year totaled $8,214,950. There has been no change in common stock over the last two years.) t is the company's financial leverage positive or negative? This Year Last Year a. The times interest eamed ratio b. The debt-to-equity ratio 4.28 5.72 0.83 0.69 c. The gross margin percentage 20.0% 25.0 % d. The retum on total assets e. The retum on equity % % 17.0% % Ets the company's financial leverage positive or negative