Lydex Company Comparative Balance Sheet This Year Last Year 5 940,000 0 2,620,000 3,580,000 250.000 7,390,000 9,480.000 $16,870,000 $ 1,180,00 300,000 1,720,000 2,300,000 190.000 5,690,000 9,030,000 $14,720,000 Assots Current stat 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, 104 Total liabilities Stockholders' equity! Comon stock, $75 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 3,990,000 3,660,000 2,650,000 $ 2,940,000 3,060,000 6,000,000 7,500,000 1,720,000 9,220,000 $16,870,000 7,500,000 1,220,000 8,720,000 $14,720,000 Lydex Company Comparative Income Statement and Reconciliation This Year Last Year Sales (all on account) $ 15,840,000 $ 13,380,000 Cost of goods sold 12.672.000 10.035,000 Gross margin 3,168,000 3,345,000 Selling and administrative expenses 1,602,000 1.596.000 Net operating income 1,566,000 1.749,000 Interest expense 366,000 306,000 Net Income before taxes 1.200,000 1,443,000 Income taxes (301) 360,000 432,900 Net income 840,000 1,010, 100 Comanon dividends 340,000 505,050 Net income retained 500.000 505.050 Beginning retained earnings 1,220,000 714,950 Ending retained earnings $ 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: Check my w 3 To begin your assignment you gather the following financiai data and ratios that are typical of companies in Lydex Company's industry of 2.0 Current ratio Acid-test ratio Average collection period Average sale period Return on assets Debt-to-equity ratio Times interest earned ratio Drie-earninga ratio 40 days daya 0.7 5.7 10 ok it 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 ratlo. 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.) 1. Is the company's financial leverage positive or negative? The times interest earned ratio b. The debt-to-equity ratio The gross margin percentage d. The retum on total assets e. The return on equity t. Is the company's financial leverage positive or negative? This Year 42B 0.83 20.01% 531 Last Your 5.72 0.89 250 73
