Problem $16-15($Algo$)$ Comprehensive Ratio Analysis $[$LO$16-2,$ LO$16-3,$ LO$16-4,$ LO$16-5,$ LO$16-6]$

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$[$The following information applies to the questions displayed below.$]$

Lydex 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 $ $1,600,000$ $ $960,000$

The following financial data and ratios 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 $16-15$ Part $3($Algo$)$

$3.$ To assess the company$$s liquidity and asset management, compute the following for this year and last year:

Working capital.

The current ratio.

Note: Round your final answers to $2$ decimal places.

The acid$-$test ratio.

Note: Round your final answers to $2$ decimal places.

The average collection period. $($The accounts receivable at the beginning of last year totaled $$1,630,000.)$

Note: Use $365$ days in a year. Round your intermediate calculations and final answers to $2$ decimal place.

The average sale period. $($The inventory at the beginning of last year totaled $$1,990,000.)$

Note: Use $365$ days in a year. Round your intermediate calculations and final answers to $2$ decimal place.

The operating cycle.

Note: Round your intermediate calculations and final answers to $2$ decimal place.

The total asset turnover. $($The total assets at the beginning of last year totaled $$13,030,000.)$

Note: Round your final answers to $2$ decimal places.Required information

Problem $16-15($Algo$)$ Comprehensive Ratio Analysis $[$LO$16-2,$ LO$16-3,$ LO$16-4,$ LO$16-5,$ LO$16-6]$

$[$The following information applies to the questions displayed below.$]$

Lydex Company's financial statements for the last two years are as follows:

Problem $16-15$ Part $3($Algo$)$

To assess the company's liquidity and asset management, compute the following for this year and last year:

a$.$ Working capital.

b$.$ The current ratio.

Note: Round your final answers to $2$ decimal places.

c$.$ The acid$-$test ratio.

Note: Round your final answers to $2$ decimal places.

d$.$ The average collection period. $($The accounts receivable at the beginning of last year totaled $$1,630,000.)$

Note: Use $365$ days in a year. Round your intermediate calculations and final answers to $2$ decimal place.

e$.$ The average sale period. $($The inventory at the beginning of last year totaled $$1,990,000.)$

Note: Use $365$ days in a year. Round your intermediate calculations and final answers to $2$ decimal place.

f$.$ The operating cycle.

Note: Round your intermediate calculations and final answers to $2$ decimal place.

g$.$ The total asset turnover. $($The total assets at the beginning of last year totaled $$13,030,000.)$

Note: Round your final answers to $2$ decimal places.