[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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Please answer A,B,C

 

Required information

Problem 14-15 (Algo) Comprehensive Ratio Analysis [LO14-2, LO14-3, LO14-4, LO14-5, LO14-6]

Skip to question

 

[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:

 

Lydex Company
Comparative Balance Sheet
  This Year Last Year
Assets    
Current assets:    
Cash $ 860,000 $ 1,100,000
Marketable securities 0 300,000
Accounts receivable, net 2,300,000 1,400,000
Inventory 3,500,000 2,000,000
Prepaid expenses 240,000 180,000
Total current assets 6,900,000 4,980,000
Plant and equipment, net 9,320,000 8,950,000
Total assets $ 16,220,000 $ 13,930,000
Liabilities and Stockholders' Equity    
Liabilities:    
Current liabilities $ 3,910,000 $ 2,780,000
Note payable, 10% 3,600,000 3,000,000
Total liabilities 7,510,000 5,780,000
Stockholders' equity:    
Common stock, $75 par value 7,500,000 7,500,000
Retained earnings 1,210,000 650,000
Total stockholders' equity 8,710,000 8,150,000
Total liabilities and stockholders' equity $ 16,220,000 $ 13,930,000

 

Lydex Company
Comparative Income Statement and Reconciliation
  This Year Last Year
Sales (all on account) $ 15,760,000 $ 12,580,000
Cost of goods sold 12,608,000 9,435,000
Gross margin 3,152,000 3,145,000
Selling and administrative expenses 1,592,000 1,564,000
Net operating income 1,560,000 1,581,000
Interest expense 360,000 300,000
Net income before taxes 1,200,000 1,281,000
Income taxes (30%) 360,000 384,300
Net income 840,000 896,700
Common dividends 280,000 448,350
Net income retained 560,000 448,350
Beginning retained earnings 650,000 201,650
Ending retained earnings $ 1,210,000 $ 650,000

 

To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company’s industry:

 

Current ratio 2.3  
Acid-test ratio 1.0  
Average collection period 30 days
Average sale period 60 days
Return on assets 8.2%  
Debt-to-equity ratio 0.7  
Times interest earned ratio 5.8  
Price-earnings ratio 10  

 

Problem 14-15 Part 2 (Algo)

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 $74 per share and that at the end of last year it was $42. 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
%
%
Transcribed Image Text: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 % %
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Accounting profession
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education