To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry: Current ratio 2.4 Acid-test ratio 1.1 Average collection period dadays Average sale period days Return on assets 9.1% Debt-to-equity ratio 13.? Times interest earned ratio 5.? Price-earnings ratio 1E3I ' Required: 1. You decide first to assess the company's performance in terms of debt management and protability. 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. Io. 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 $13,050,000.) e. The return on equity. [Stockholders' equity at the beginning of last year totaled $8,214,950. There has been no change in common stock over the last two years.) f. Is the company's nancial leverage positive or negative? . The times interest earned ratio . The debtteequily ratio The gross margin percentage . The return on total assets . The return on equity Is the company's nancial 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 $90 per share and that at the end of last year it was $58. 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 yo d. The price-earnings ratio e. The book value per share of common stock3. You decide, nally, 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 $1,650,000.) {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 $2,010,000.) [Use 355 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 atthe beginning of last year totaled $13,050,000.) {Round your nal answers to 2 decimal places.) Womanwnnal _-_ Ernemm _-_ l_-_ _m e. The average sale pelted f. The operating cycle g. The total asset turnover 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 940, 000 $ 1, 180,000 Marketable securities 300, 000 Accounts receivable, net 2, 620, 900 1, 720, 090 Inventory 3,580, 000 2, 300, 900 Prepaid expenses 250, 900 190, 000 Total current assets 7,390, 000 5, 690, 900 Plant and equipment, net 9, 480, 000 9, 030, 000 Total assets $ 16, 870,090 $ 14, 720, 000 Liabilities and Stockholders Equity Liabilities: Current liabilities $ 3,990,900 $ 2,940,000 Note payable, 10% 3, 660, 000 3, 060, 000 Total liabilities 7, 650, 909 6, 000, 090 Stockholders' equity: Common stock, $75 par value 7,500, 090 7,500, 000 Retained earnings 1, 720, 000 1, 220, 900 Total stockholders' equity 9, 220, 000 8, 720, 000 Total liabilities and stockholders' equity $ 16, 870, 006 $ 14, 720, 006 Lydex Company Comparative Income Statement and Reconciliation This Year Last Year Sales (all on account) $ 15, 840, 000 $ 13, 380,000 Cost of goods sold 12, 672, 900 10,035, 090 Gross margin 3, 168, 000 3, 345, 900 Selling and administrative expenses 1, 602, 000 1, 596, 000 Net operating income 1, 566, 900 1, 749,900 Interest expense 366, 000 306, 900 Net income before taxes 1, 200, 090 1, 443, 900 Income taxes (30%) 360, 000 432, 900 Net income 840, 000 1, 010, 100 Common dividends 340, 000 505, 050 Net income retained 500, 090 505, 050 Beginning retained earnings 1, 220, 900 714, 950 Ending retained earnings 1, 720, 900 $ 1, 220, 000