Lydex Company Comparative Balance Sheet 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: Retained earnings Total stockholders' equity Common stock, $ 78 par value Total liabilities and stockholders' equity This Year Last Year $960,000 $ 1,260,000 0 300,000 2,700,000 3,900,000 240,000 7,800,000 9,300,000 $ 17,100,000 $ 3,900,000 3,600,000 7,500,000 7,800,000 1,800,000 1,800,000 2,400,000 180,000 5,940,000 8,940,000 $ 14,880,000 $ 2,760,000 3,000,000 5,760,000 7,800,000 1,320,000 9,120,000 9,600,000 $ 17,100,000 $ 14,880,000 Sales (all on account) Lydex Company Comparative Income Statement and Reconciliation This Year $ 15,750,000 12,600,000 3,150,000 1,590,000 Last Year $ 12,480,000 9,900,000 2,580,000 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 1,560,000 1,560,000 1,020,000 360,000 300,000 1,200,000 720,000 360,000 216,000 840,000 504,000 360,000 252,000 480,000 1,320,000 252,000 1,068,000 $ 1,800,000 $ 1,320,000 The following financial data and ratios are typical of companies in Lydex Company's industry: Current ratio Acid-test ratio 2.3 1.2 Average collection period 30 days Average sale period 60 days Return on assets 9.5% Debt-to-equity ratio 0.65 Times interest earned ratio 5.7 Price-earnings ratio 10 a. The times interest earned ratio This Year Last Year b. The debt-to-equity ratio c. The gross margin percentage 20.0 % % d. The return on total assets % % e. The return on equity % % f. Is the company's financial leverage positive or negative? Positive Positive
Lydex Company Comparative Balance Sheet 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: Retained earnings Total stockholders' equity Common stock, $ 78 par value Total liabilities and stockholders' equity This Year Last Year $960,000 $ 1,260,000 0 300,000 2,700,000 3,900,000 240,000 7,800,000 9,300,000 $ 17,100,000 $ 3,900,000 3,600,000 7,500,000 7,800,000 1,800,000 1,800,000 2,400,000 180,000 5,940,000 8,940,000 $ 14,880,000 $ 2,760,000 3,000,000 5,760,000 7,800,000 1,320,000 9,120,000 9,600,000 $ 17,100,000 $ 14,880,000 Sales (all on account) Lydex Company Comparative Income Statement and Reconciliation This Year $ 15,750,000 12,600,000 3,150,000 1,590,000 Last Year $ 12,480,000 9,900,000 2,580,000 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 1,560,000 1,560,000 1,020,000 360,000 300,000 1,200,000 720,000 360,000 216,000 840,000 504,000 360,000 252,000 480,000 1,320,000 252,000 1,068,000 $ 1,800,000 $ 1,320,000 The following financial data and ratios are typical of companies in Lydex Company's industry: Current ratio Acid-test ratio 2.3 1.2 Average collection period 30 days Average sale period 60 days Return on assets 9.5% Debt-to-equity ratio 0.65 Times interest earned ratio 5.7 Price-earnings ratio 10 a. The times interest earned ratio This Year Last Year b. The debt-to-equity ratio c. The gross margin percentage 20.0 % % d. The return on total assets % % e. The return on equity % % f. Is the company's financial leverage positive or negative? Positive Positive
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
Section: Chapter Questions
Problem 4E
Related questions
Question
![Lydex Company
Comparative Balance Sheet
This Year
Last Year
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, $ 78 par value
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
$ 960,000
0
2,700,000
3,900,000
240,000
7,800,000
9,300,000
$ 17,100,000
$ 3,900,000
3,600,000
7,500,000
7,800,000
1,800,000
9,600,000
$ 17,100,000
$ 1,260,000
300,000
1,800,000
2,400,000
180,000
5,940,000
8,940,000
$ 14,880,000
$ 2,760,000
3,000,000
5,760,000
7,800,000
1,320,000
9,120,000
$ 14,880,000
Sales (all on account)
Lydex Company
Comparative Income Statement and Reconciliation
This Year
$ 15,750,000
12,600,000
3,150,000
1,590,000
Last Year
$ 12,480,000
9,900,000
2,580,000
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
1,560,000
1,560,000
1,020,000
360,000
300,000
1,200,000
720,000
360,000
216,000
840,000
504,000
360,000
252,000
480,000
252,000
1,320,000
1,068,000
$ 1,800,000
$ 1,320,000
The following financial data and ratios are typical of companies in Lydex Company's industry:
Current ratio
Acid-test ratio
2.3
1.2
Average collection period
30 days
Average sale period
60 days
Return on assets
9.5%
Debt-to-equity ratio
0.65
Times interest earned ratio
5.7
Price-earnings ratio
10
a. The times interest earned ratio
b. The debt-to-equity ratio
This Year
Last Year
c. The gross margin percentage
20.0
%
%
d. The return on total assets
%
%
e. The return on equity
%
%
f. Is the company's financial leverage positive or negative?
Positive
Positive](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc6b776f4-6d42-404c-8a6f-b00f5d01617d%2Fc9c00102-75a4-4eb7-9164-f131b0a953a0%2F4lnx3o_processed.png&w=3840&q=75)
Transcribed Image Text:Lydex Company
Comparative Balance Sheet
This Year
Last Year
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, $ 78 par value
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
$ 960,000
0
2,700,000
3,900,000
240,000
7,800,000
9,300,000
$ 17,100,000
$ 3,900,000
3,600,000
7,500,000
7,800,000
1,800,000
9,600,000
$ 17,100,000
$ 1,260,000
300,000
1,800,000
2,400,000
180,000
5,940,000
8,940,000
$ 14,880,000
$ 2,760,000
3,000,000
5,760,000
7,800,000
1,320,000
9,120,000
$ 14,880,000
Sales (all on account)
Lydex Company
Comparative Income Statement and Reconciliation
This Year
$ 15,750,000
12,600,000
3,150,000
1,590,000
Last Year
$ 12,480,000
9,900,000
2,580,000
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
1,560,000
1,560,000
1,020,000
360,000
300,000
1,200,000
720,000
360,000
216,000
840,000
504,000
360,000
252,000
480,000
252,000
1,320,000
1,068,000
$ 1,800,000
$ 1,320,000
The following financial data and ratios are typical of companies in Lydex Company's industry:
Current ratio
Acid-test ratio
2.3
1.2
Average collection period
30 days
Average sale period
60 days
Return on assets
9.5%
Debt-to-equity ratio
0.65
Times interest earned ratio
5.7
Price-earnings ratio
10
a. The times interest earned ratio
b. The debt-to-equity ratio
This Year
Last Year
c. The gross margin percentage
20.0
%
%
d. The return on total assets
%
%
e. The return on equity
%
%
f. Is the company's financial leverage positive or negative?
Positive
Positive
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