heck 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 compan'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: Lydex Company Comparative Balance Sheet This Yea Assets Current assetst Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses $890,000 1,130,000 300,000 2,420,000 1,520,000 2, 300,000 180,000 5,430,000 9,380,0008.980,000 $16,460,000 $14,410,000 3,530,000o 240,000 Total current assets Plant and equipment, net Total assets Liabilities and Stockholders Equity 7,080,000 Liabilities: Current liabilities Note payable, 10% 3,940,000 2,840,000 3 620 000 3,020,000 Total liabilities Stockholders' equity: 7,560,000 7,000,000 50,000 8,550,000 $16,460,000 $14,410,000 7,000,000 1,900,00 900,000 Common stock, $70 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Lydex Company Comparative Income Statement and Reconeiliation Last Year $15,790,000 12,880,000 This Year Check my work Conparative Income Statement and Reconeiliation Sales (all on aceount) cost of goods sold Gross margin Selling and administrative expenses Net operating incone Interest expense Net ineone before taxes 15,790,000 12,880,000 ,158,000 ,220,000 1,796,0001,576,000 1,644,000 1,362,000 62,000 000,000 1,342,000 00,000402,600 939,400 469,700 69,700 tneone taxes (30) Net income Conmon dividends Net income retained Beginning retained earnings 700,000 350,000 50,000 Ending retained earninga 000,000.$ 1,550,000 To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry 2.3 1.0 Current ratio Acid-test ratio Average collection period Average sale period Return on assets Debt-to-equity ratio Tines interest earned ratio Price-earnings ratio 40 days 60 days 8.55 0.7 5.8 10 3 You decide, finally, to assess the company's liquidity and asset management. For both this year and last year, compute 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.) e average collection period. (the account receiab a the beginning of last year totaled $1600,00) (Use 365 days in a year Round your intermediate calculations and final answer to 2 decimal place.) e. The average sale period. (The inventory at the beginning of last year totaled $1,960,000) (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal place.) f. The operating cycle. (Round your intermediate calculations and final answer to 2 decimal place.) g. The total asset turnover (The total assets at the beginning of last year totaled $14,540,000.) (Round your final answers to 2 decimal places.) Last Year 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 tunover days days days days days days
