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 Lydex Company Comparative Balance Sheet This Year Last Year 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 $980,000 0 2,780,000 3,620,000 260,000 7,640,000 9,560,000 $ 17,200,000 $ 4,030,000 3,680,000 7,710,000 7,500,000 1,990,000 9,490,000 $ 1,220,000 300,000 1,880,000 2,200,000 200,000 5,800,000 9,070,000 $ 14,870,000 $ 3,020,000 3,080,000 6,100,000 7,500,000 1,270,000 8,770,000 $ 17,200,000 $ 14,870,000 Comparative Income Statement and Reconciliation Sales (all on account) This Year $ 15,880,000 Last Year $ 13,780,000 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 12,704,000 3,176,000 1,208,000 1,968,000 368,000 10,335,000 3,445,000 1,612,000 1,833,000 308,000 1,600,000 480,000 1,120,000 1,525,000 457,500 1,067,500 400,000 533,750 720,000 1,270,000 533,750 736,250 $ 1,990,000 $ 1,270,000 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 2.4 1.1 Average collection period 32 days Average sale period 60 days Return on assets 9.5% Debt-to-equity ratio 0.7 Times interest earned ratio 5.8 Price-earnings ratio 10 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 $98 per share and that at the end of last year it was $66. 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. 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 % %

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 Lydex Company Comparative Balance Sheet This Year Last Year 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 $980,000 0 2,780,000 3,620,000 260,000 7,640,000 9,560,000 $ 17,200,000 $ 4,030,000 3,680,000 7,710,000 7,500,000 1,990,000 9,490,000 $ 1,220,000 300,000 1,880,000 2,200,000 200,000 5,800,000 9,070,000 $ 14,870,000 $ 3,020,000 3,080,000 6,100,000 7,500,000 1,270,000 8,770,000 $ 17,200,000 $ 14,870,000 Comparative Income Statement and Reconciliation Sales (all on account) This Year $ 15,880,000 Last Year $ 13,780,000 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 12,704,000 3,176,000 1,208,000 1,968,000 368,000 10,335,000 3,445,000 1,612,000 1,833,000 308,000 1,600,000 480,000 1,120,000 1,525,000 457,500 1,067,500 400,000 533,750 720,000 1,270,000 533,750 736,250 $ 1,990,000 $ 1,270,000 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 2.4 1.1 Average collection period 32 days Average sale period 60 days Return on assets 9.5% Debt-to-equity ratio 0.7 Times interest earned ratio 5.8 Price-earnings ratio 10 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 $98 per share and that at the end of last year it was $66. 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. 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 % %

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 63P: Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture...

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