Problem 14-15 (Algo) Comprehensive Ratio Analysis [LO14-2, LO14-3, LO14-4, LO14-5, LO14-6] [The following information applies to the questions displayed below.] 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 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, 10% $ 920,000 0 2,540,000 3,560,000 250,000 7,270,000 9,440,000 $ 16,710,000 $ 1,160,000 300,000 1,640,000 2,100,000 190,000 5,390,000 9,010,000 $ 14,400,000 Total liabilities Stockholders' equity: Common stock, $75 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Lydex Company $ 3,970,000 3,640,000 7,610,000 7,500,000 1,600,000 9,100,000 $ 16,710,000 $ 2,900,000 3,040,000 5,940,000 7,500,000 960,000 8,460,000 $ 14,400,000 Comparative Income Statement and Reconciliation Sales (all on account) Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income Common dividends Net income retained This Year $ 15,820,000 12,656,000 3,164,000 1,400,000 1,764,000 364,000 Last Year $ 13,180,000 9,885,000 3,295,000 1,588,000 1,707,000 304,000 1,400,000 1,403,000 420,000 420,900 980,000 982,100 340,000 491,050 640,000 491,050 Interest expense 364,000 304,000 Net income before taxes 1,400,000 1,403,000 Income taxes (30%) 420,000 420,900 Net income 980,000 982,100 Common dividends 340,000 491,050 Net income retained 640,000 491,050 Beginning retained earnings 960,000 468,950 $ 1,600,000 $960,000 Ending retained earnings To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry: Current ratio Acid-test ratio 2.3 1.1 Average collection period Average sale period 40 days 60 days Return on assets 8.8% Debt-to-equity ratio 0.7 Times interest earned ratio 5.8 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-eamings ratio. e. The book value per share of common stock. The eamings per share b. The dividend yield rato c. The dividend payout ratio d. The price-eamings ratio The book value per share of common stock This Year Last Year cuing retai To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry: Current ratio Acid-test ratio. Average collection period 2.3 1.1 40 days Average sale period 60 days Return on assets 8.8% Debt-to-equity ratio 0.7 Tines interest earned ratio Price-earnings ratio 5.8 10 Problem 14-15 Part 3 (Algo) 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.) d. The average collection period. (The accounts receivable at the beginning of last year totaled $1,630,000.) (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) (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) f. The operating cycle. (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) (Round your final answers to 2 decimal places.) a. Working capital b. The current ratio This Year Last Year c. The acid-test ratio d. The average collection period days days e. The average sale period days days f. The operating cycle days days g. The total asset turmover i