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 performanc to its major competitors. The company's financial statements for the last two years are as follows: Lydex Company Comparative Balance sheet This Year Lont Year Assets Current annet Cash 870,000 $1,110,000 Marketable securities 0 300,000 Accounts receivable, net 2,340,000 1,440,000 Inventory 3,510,000 2.100,000 Prepaid expensen 240,000 180,000 Total current donet 6,960,000 5,130,000 Plant and equipment, net 9,340,000 8,960,000 Total annet $16,300,000 $14,090,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 3.920,000 $ 2,800,000 Note payable, 10 3,600,000 3,000,000 Total liabilition 7,520,000 5,800,000 Stockholders' equity! Common stock, $70 par value 7.000.000 7,000,000 Retained earnings 1,780,000 1,290,000 Total stockholders equity 8.780,000 8, 290,000 Total Liabilities and stockholders' equity $16,300,000 $14,090,000 eoints eBook tydex Company Comparative Income statement and Reconciliation This Year Last Year Sales (all on account) $ 15,770,000 $12,680,000 Cost of goods sold 12,616,000 9,510,000 Gross margin 3,154,000 3,170,000 Selling and administrative expenses 1,594,000 1.568.000 Net operating income 1,560,000 1,602,000 Interest expenne 360.000 300,000 Net Income before taken 1,200.000 1,302,000 Income taxes (30) 360,000 390,600 Net income 840,000 911,400 Common dividenda 350,000 455,700 Net Income retained 490,000 455,700 Beginning retained earnings 1,290.000 834 300 Ending retained earning $ 1.780,000 1,290,000 References 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 Average male period Return on assets Debt-to-equity ratio Times interest earned ratio Price-earnings ratio 2.3 1.0 30 days 6 days 8.30 0.7 5.9 10 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 ossets. (Total assets at the beginning of last year were $12,980,000) o. The return on equity. (Stockholders' equity at the beginning of last year totaled $7,834,300. There has been no change in common stock over the last two years.) 1. Is the company's financial leverage positive or negative? This Year Last Year % The times interest earned ratio b. The debt to equity ratio ... The gross margin percentage a The return on total assets The return on equity finna *** Prev 1 2 3 of 4 !!! Next >
