Problem $14-15($Algo$)$ Comprehensive Ratio Analysis $[$LO$14-2,$ LO$14-3,$ LO$14-4,$ LO$14-5,$ LO$14-6]$

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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

Assets

Current assets:

Cash $ $920,000$ $ $1,160,000$

Marketable securities $0300,000$

Accounts receivable, net $2,540,0001,640,000$

Inventory $3,560,0002,100,000$

Prepaid expenses $250,000190,000$

Total current assets $7,270,0005,390,000$

Plant and equipment, net $9,440,0009,010,000$

Total assets $ $16,710,000$ $ $14,400,000$

Liabilities and Stockholders' Equity

Liabilities:

Current liabilities $ $3,970,000$ $ $2,900,000$

Note payable, $10\%3,640,0003,040,000$

Total liabilities $7,610,0005,940,000$

Stockholders' equity:

Common stock, $$75$ par value $7,500,0007,500,000$

Retained earnings $1,600,000960,000$

Total stockholders' equity $9,100,0008,460,000$

Total liabilities and stockholders' equity $ $16,710,000$ $ $14,400,000$

Lydex Company

Comparative Income Statement and Reconciliation

This Year Last Year

Sales $($all on account$)$ $ $15,820,000$ $ $13,180,000$

Cost of goods sold $12,656,0009,885,000$

Gross margin $3,164,0003,295,000$

Selling and administrative expenses $1,400,0001,588,000$

Net operating income $1,764,0001,707,000$

Interest expense $364,000304,000$

Net income before taxes $1,400,0001,403,000$

Income taxes $(30\%)420,000420,900$

Net income $980,000982,100$

Common dividends $340,000491,050$

Net income retained $640,000491,050$

Beginning retained earnings $960,000468,950$

Ending retained earnings $ $1,600,000$ $ $960,000$

To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company$$s industry:

Current ratio $2\mathrm{.}3$

Acid$-$test ratio $1\mathrm{.}1$

Average collection period $40$ days

Average sale period $60$ days

Return on assets $8\mathrm{.}8\%$

Debt$-$to$-$equity ratio $0\mathrm{.}7$

Times interest earned ratio $5\mathrm{.}8$

Price$-$earnings 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 $$86$ per share and that at the end of last year it was $$54.$ 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.