Required information 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 Conp any Conparat ive Balance Sheet This Year Last Year Assets Current assets $ 890, 000 , 130, 000 300, 000 ,520, 000 2, 300, 000 180, 000 5, 430, 000 8. 980, 000 $ 16, 460, 000 14, 410, 000 Cash tarketable securities Accounts receivable, net Inventorny Prepaid expenses 2, 420, 000 3, 530, 000 240, 000 7, 080, 000 380, 000 Total current assets Plant and equipnent, net Total assets Liabilities and Stockholders Equity Liabilities $ 3,940, 000 2,840, 000 860, 000 7, 000, 000 Current liabilities Note payable, 10% 3, 620, 000 7, 560, 000 Total 1iabilities Stockholders equity Comnon stock. $0 par value Retained eamings 7. 000, 000 1, 900, 000 Total stockholders'equity Total liabilities and stockholders equity $ 16. 460,000 14,410, 000 Lydex Conpany Comparative Incone Statenent and Reconciliation Sales (all cn account) $ 15, 790, 000 12, 880, 000 Selling and adhinistrative expenses Net incone before taxes retained eamings $ .900, 000 1. 550, 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 Average collection period 60 days Debt-to-equity ratio Tines interest eamed ratio f 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 ratio 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 $13,000,000.) e. The return on equity. (Stockholders' equity at the beginning of last year totaled $8,080,300. There has been no change in common stock over the last two years.) f. Is the company's financial leverage positive or negative? a. The times interest earned ratio b. The debt-to-equity ratio c. The gross margin percentage d. The return on total assets e. The return on equity Is the company's financial leverage positive or negative? 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 $80 per share and that at the end of last year it was $48. 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 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 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 $1,600,000.) (Use 365 days in a year Round your intermediate calculations and final answer to 2 decimal place.) e. The average sale period. (The inventory at the beginning of last year totaled $1,960,000) (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal place.) f. The operating cycle. (Round your intermediate calculations and final answer to 2 decimal place.) g. The total asset turnover. (The total assets at the beginning of last year totaled $14,540,000) (Round your final answers to 2 decimal places.) This Year Last Year a. Working capital b. The current ratio c. The acid-test ratio d. The average collection period e. The average sale period . The operating cycle g. The total asset turnover days days days days days days
