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 Year Assets Current assets: $ 960,000 1,200,000 Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses 300,000 2,700,000 3,600,000 260,000 7,520,000 1,800,000 2,000,000 200,000 5,500,000 9,050,000 Total current assets Plant and equipment, net Total assets Liabilities and Stockholders' Equity $17,040,000 14,550,000 Liabilities: Current liabilities Note payable, 10 5 4,010,000 3.660,000 7-670,000 2,980,000 3,060,000 6,040,000 Total liabilities Stockholders' equity: 7,500,000 1,010.000 510,000 $17,040,000 $14,550,000 7,500,000 1,870,000 370,000 Common stock, $75 par value Retained earnings Total atockholders equity Total liabilities and stockholders equity Comparative Income Statement and Reconciliation This YearLast Year 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 (308) Net income Common dividends Net income retained Beginning retained earnings Ending retained earnings 15,860,000 $ 13,580,000 12,688,000 10.185,000 3,395, 000 1.604,000 1,791,000 306,000 1,485,000 445,500 1,039,50o 19.750 519,750 490.250 3,172,000 006,000 2,166,000 366,000 1,800,000 1,260, 000 400,000 860,000 $ 1,870,000 $ 1,010,000 To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry Current ratio Acid-test ratio Average collection period Average sale period Return on asseta Debt-to-equity ratio rimes interest earned ratio Price-earnings ratio 60 days 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 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 $2.030,000) (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal place.) accounts receivable at the beginning of last year totaled $1.670,000) (Use 365 days in a year. operating cycle. (Round your intermediate calculations and final answer to 2 decimal place.) g. The total asset turnover.(The t places.) total assets at the beginning of last year totaled $14,610,000, (Round your final answers to 2 decimal This Year Last Year a. Working capital b. The current ratio c. The acid-test rato d. The average collection period o. The average sale period f. The operating cycle g. The total asset tumover days days days days days days
