Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

im so confused You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety helmets. Your boss has asked you

im so confused
image text in transcribed
image text in transcribed
image text in transcribed
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: Lydex Company Comparative Balance Sheet This Year Last Year $ 930,000 o 2,580,000 3,570,000 250,000 7,330,000 9,460,000 $ 16,790,000 $ 1,170,000 300,000 1,680,000 2,200,000 190,000 5,540,000 9.020,000 $ 14,560,000 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, 100 Total liabilities Stockholders' equity: Common stock, $70 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 3,980,000 3,640,000 7,620,000 $ 2,920,000 3,040,000 5,960,000 7,000,000 2,170.000 9,170,000 $ 16,790,000 7,000,000 1,600,000 8,600,000 $ 14,560,000 Lydex Company Comparative Income Statement and Reconciliation This Year Sales (all on account) $ 15,830,000 Cost of goods sold 12,664,000 Gross margin 3,166,000 Selling and administrative expenses 1,402,000 Net operating income 1,764,000 Interest expense 364,000 Net income before taxes 1,400,000 Income taxes (308) 420,000 Last Year $ 13,280,000 9,960,000 3,320,000 1.592,000 1,728,000 304,000 1,424,000 427,200 AAAAA co Income taxes (308) 420.000 427,200 Net Income 980.000 996.800 Common dividendo 410,000 498,400 Net Income retained 570.000 498,400 Deginning retained earnings 1.600.000 1. 101,600 Ending retained earnings $ 2,170,000 $ 1.600.000 To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry Current ratio 2:3 Acid-test ratio 1.1 Average collection period 40 days Average sale period 60 days Return on annet 8.94 Debt-to-equity ratio 0.7 Tinos interest earned ratio 5.9 Price-earning ratio 10 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 $88 per share and that at the end of last year it was $56. 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, This Year Last Year a. The comings per sharo b. The dividend yield ratio c. The dividend payout ratio % % 2. You decide next to assess the company's stock market performance. Assume that Lydex's stock price at the en per share and that at the end of last year it was $56. For both this year and last year, compute: (Round your "Perc 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 This Year Last Year % % % a. The earnings per share b. The dividend yield ratio c. The dividend payout ratio d. The price-eamings ratio e. The book value per share of common stock

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Accounting

Authors: Frederick D. Choi, Gary K. Meek

7th Edition

978-0136111474, 0136111475

More Books

Students also viewed these Accounting questions

Question

3. What is the opportunity cost of reading this textbook?

Answered: 1 week ago