!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 askedyou to perform a comprehensive analysis of the company's financial statements, including comparing Lydex's performanceto its major competitors. The company's financial statements for the last two years are as follows:AssetsCurrent assets:CashMarketable securitiesAccounts receivable, netInventoryPrepaid expensesTotal current assetsPlant and equipment, netTotal assetsLiabilities and Stockholders' EquityLiabilities:Current liabilitiesNote payable, 10%Total liabilitiesLydex CompanyComparative Balance SheetStockholders' equity:Common stock, $70 par value.Retained earningsTotal stockholders' equityTotal liabilities and stockholders' equitySales (all on account)Cost of goods soldGross marginSelling and administrative expensesNet operating incomeInterest expenseNet income before taxesIncome taxes (30%)Net incomeCommon dividendsNet income retainedBeginning retained earningsEnding retained earningsCurrent ratioAcid-test ratioAverage collection periodAverage sale periodReturn on assetsLydex CompanyComparative Income Statement and ReconciliationThis YearDebt-to-equity ratioTimes interest earned ratioPrice-earnings ratio2.31.0This Year$ 910,00040 days.60 days8.7%0.75.7102,500,0003,550,000250,0007,210,0009,420,000$ 16,630,000$ 3,960,0003,640,0007,600,000$ 15,810,00012,648,0003,162,0001,298,0001,864,000364,00001,500,000450,0007,000,0002,030,0009,030,000$ 16,630,000 $ 14,240,0001,050,000340,000710,0001,320,000$ 2,030,000Last Year$ 1,150,000300,0001,600,0002,000,000190,0005,240,0009,000,000$ 14,240,000$ 2,880,0003,040,0005,920,0007,000,0001,320,0008,320,000To begin your assignment you gather the following financial data and ratios that are typical of companies in LydexCompany's industry:Last Year$ 13,080,0009,810,0003,270,0001,584,0001,686,000304,0001,382,000414,600967,400483,700483,700836,300$ 1,320,000 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 $1,620,000.) (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 $1,980,000.) (Use 365 days in a year. Round yourintermediate 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 $13,020,000.) (Round your final answers to 2 decimalplaces.)a. Working capitalb. The current ratioc. The acid-test ratiod. The average collection periode. The average sale periodf. The operating cycleg. The total asset turnoverThis YeardaysdaysdaysLast Yeardaysdaysdays

Calculation of Working CapitalWorking Capital =Current Assets-Current Liabilities Working Capital…

3. You decide, finally, to assess the company's liquidity and asset management. For bo 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 yea 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 $1,980, intermediate calculations and final answers to 2 decimal place.) f. The operating cycle. (Round your intermediate calculations and final answers to 2 g. The total asset turnover. (The total assets at the beginning of last year totaled $13,02 places.) 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 This Year days days days Last Year days days days

3. You decide, finally, to assess the company's liquidity and asset management. For bo 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 yea 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 $1,980, intermediate calculations and final answers to 2 decimal place.) f. The operating cycle. (Round your intermediate calculations and final answers to 2 g. The total asset turnover. (The total assets at the beginning of last year totaled $13,02 places.) 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 This Year days days days Last Year days days days

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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