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: 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% Total liabilities Stockholders' equity: Common stock, $75 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Lydex Company Comparative Balance Sheet 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%) Lydex Company Comparative Income Statement and Reconciliation This Year Net income Common dividends Net income retained Beginning retained earnings Ending retained earnings Current ratio Acid-test ratio Average collection period Average sale period Return on assets Debt-to-equity ratio Times interest earned ratio Price-earnings ratio Problem 14-15 Part 3 (Algo) 2.4 1.1 This Year $ 960,000 @ 2,700,000 3,600,000 260,000 40 days 60 days 9.3% 0.7 5.9 10 7,520,000 9,520,000 $ 17,040,000 $ 4,010,000 7,670,000 7,500,000 1,870,000 9,370,000 $ 17,040,000 $ 15,860,000 12,688,000 3,172,000 1,006,000 2,166,000 366,000 1,800,000 540,000 1,260,000 400,000 860,000 1,010,000 $ 1,870,000 Last Year $ 1,200,000 300,000 1,800,000 2,000,000 200,000 5,500,000 9,050,000 $ 14,550,000 $ 2,980,000 3,060,000 6,040,000 To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry. 7,500,000 1,010,000 8,510,000 $ 14,550,000 Last Year $ 13,580,000 10,185,000 3,395,000 1,604,000 1,791,000 306,000 1,485,000 445,500 1,039,500 519,750 519,750 490,250 $ 1,010,000 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.)
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: 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% Total liabilities Stockholders' equity: Common stock, $75 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Lydex Company Comparative Balance Sheet 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%) Lydex Company Comparative Income Statement and Reconciliation This Year Net income Common dividends Net income retained Beginning retained earnings Ending retained earnings Current ratio Acid-test ratio Average collection period Average sale period Return on assets Debt-to-equity ratio Times interest earned ratio Price-earnings ratio Problem 14-15 Part 3 (Algo) 2.4 1.1 This Year $ 960,000 @ 2,700,000 3,600,000 260,000 40 days 60 days 9.3% 0.7 5.9 10 7,520,000 9,520,000 $ 17,040,000 $ 4,010,000 7,670,000 7,500,000 1,870,000 9,370,000 $ 17,040,000 $ 15,860,000 12,688,000 3,172,000 1,006,000 2,166,000 366,000 1,800,000 540,000 1,260,000 400,000 860,000 1,010,000 $ 1,870,000 Last Year $ 1,200,000 300,000 1,800,000 2,000,000 200,000 5,500,000 9,050,000 $ 14,550,000 $ 2,980,000 3,060,000 6,040,000 To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry. 7,500,000 1,010,000 8,510,000 $ 14,550,000 Last Year $ 13,580,000 10,185,000 3,395,000 1,604,000 1,791,000 306,000 1,485,000 445,500 1,039,500 519,750 519,750 490,250 $ 1,010,000 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.)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter12: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 12.4E
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![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:
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%
Total liabilities
Stockholders' equity:
Common stock, $75 par value
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
Lydex Company
Comparative Balance Sheet
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.
Beginning retained earnings
Ending retained earnings
Current ratio
Acid-test ratio
Average collection period
Average sale period.
Return on assets
Debt-to-equity ratio
Times interest earned ratio
Price-earnings ratio
Problem 14-15 Part 3 (Algo)
Lydex Company
Comparative Income Statement and Reconciliation
This Year
$ 15,860,000
12,688,000
3,172,000
a. Working capital
b. The current ratio
c. The acid-test ratio
d. The average collection period
e. The average sale period
f. The operating cycle
g. The total asset turnover
2.4
1.1
40 days
60 days
9.3%
0.7
5.9
10
This Year
This Year
$ 960,000
2,700,000
3,600,000
260,000
7,520,000
9,520,000
$ 17,040,000
days
days
days
$ 4,010,000
3,660,000
7,670,000
7,500,000
1,870,000
9,370,000
$ 17,040,000
1,006,000
2,166,000
366,000
1,800,000
540,000
1,260,000
400,000
860,000
1,010,000
$ 1,870,000
To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex
Company's industry:
Last Year
Last Year
$ 1,200,000
300,000
1,800,000
2,000,000
200,000
5,500,000
9,050,000
$ 14,550,000
$ 2,980,000
3,060,000
6,040,000
days
days
days
7,500,000
1,010,000
8,510,000
$ 14,550,000
Last Year
$ 13,580,000
10,185,000
3,395,000
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 $1,670,000.) (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 $2,030,000.) (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 $13,070,000.) (Round your final answers to 2 decimal
places.)
1,604,000
1,791,000
306,000
1,485,000
445,500
1,039,500
519,750
519,750
490,250
$ 1,010,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fad61fb23-6772-4c68-a944-71325d2213c5%2F1b86d4b4-b9ef-4725-aa8e-8321a1aa41c9%2Fj0mxxji_processed.png&w=3840&q=75)
Transcribed Image Text: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:
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%
Total liabilities
Stockholders' equity:
Common stock, $75 par value
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
Lydex Company
Comparative Balance Sheet
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.
Beginning retained earnings
Ending retained earnings
Current ratio
Acid-test ratio
Average collection period
Average sale period.
Return on assets
Debt-to-equity ratio
Times interest earned ratio
Price-earnings ratio
Problem 14-15 Part 3 (Algo)
Lydex Company
Comparative Income Statement and Reconciliation
This Year
$ 15,860,000
12,688,000
3,172,000
a. Working capital
b. The current ratio
c. The acid-test ratio
d. The average collection period
e. The average sale period
f. The operating cycle
g. The total asset turnover
2.4
1.1
40 days
60 days
9.3%
0.7
5.9
10
This Year
This Year
$ 960,000
2,700,000
3,600,000
260,000
7,520,000
9,520,000
$ 17,040,000
days
days
days
$ 4,010,000
3,660,000
7,670,000
7,500,000
1,870,000
9,370,000
$ 17,040,000
1,006,000
2,166,000
366,000
1,800,000
540,000
1,260,000
400,000
860,000
1,010,000
$ 1,870,000
To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex
Company's industry:
Last Year
Last Year
$ 1,200,000
300,000
1,800,000
2,000,000
200,000
5,500,000
9,050,000
$ 14,550,000
$ 2,980,000
3,060,000
6,040,000
days
days
days
7,500,000
1,010,000
8,510,000
$ 14,550,000
Last Year
$ 13,580,000
10,185,000
3,395,000
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 $1,670,000.) (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 $2,030,000.) (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 $13,070,000.) (Round your final answers to 2 decimal
places.)
1,604,000
1,791,000
306,000
1,485,000
445,500
1,039,500
519,750
519,750
490,250
$ 1,010,000
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