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: Lydex Company Comparative Balance Sheet This Year Last Year 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 $ 920,000 0 2,540,000 3,560,000 250,000 7,270,000 9,440,000 $ 1,250,000 300,000 1,640,000 2,100,000 190,000 5,480,000 9,010,000 $ 16,710,000 $ 14,490,000 $ 3,600,000 $ 2,900,000 3,640,000 7,240,000 7,500,000 1,970,000 9,470,000 3,040,000 5,940,000 7,500,000 1,050,000 8,550,000 $ 16,710,000 $ 14,490,000 Lydex Company Comparative Income Statement and Reconciliation 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 This Year $ 15,820,000 12,656,000 Last Year $ 13,180,000 9,885,000 3,164,000 3,295,000 1,000,000 1,588,000 2,164,000 1,707,000 364,000 304,000 1,403,000 420,900 1,260,000 982,100 340,000 491,050 920,000 491,050 1,050,000 558,950 1,800,000 540,000 $ 1,970,000 $ 1,050,000 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 Average collection period 2.3 1.2 40 days Average sale period 60 days Return on assets 8.8% Debt-to-equity ratio 0.67 Times interest earned ratio 5.8 Price-earnings ratio 10 Required: 1. Present the balance sheet in common-size format. 2. Present the income statement in common-size format down through net income.
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: Lydex Company Comparative Balance Sheet This Year Last Year 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 $ 920,000 0 2,540,000 3,560,000 250,000 7,270,000 9,440,000 $ 1,250,000 300,000 1,640,000 2,100,000 190,000 5,480,000 9,010,000 $ 16,710,000 $ 14,490,000 $ 3,600,000 $ 2,900,000 3,640,000 7,240,000 7,500,000 1,970,000 9,470,000 3,040,000 5,940,000 7,500,000 1,050,000 8,550,000 $ 16,710,000 $ 14,490,000 Lydex Company Comparative Income Statement and Reconciliation 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 This Year $ 15,820,000 12,656,000 Last Year $ 13,180,000 9,885,000 3,164,000 3,295,000 1,000,000 1,588,000 2,164,000 1,707,000 364,000 304,000 1,403,000 420,900 1,260,000 982,100 340,000 491,050 920,000 491,050 1,050,000 558,950 1,800,000 540,000 $ 1,970,000 $ 1,050,000 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 Average collection period 2.3 1.2 40 days Average sale period 60 days Return on assets 8.8% Debt-to-equity ratio 0.67 Times interest earned ratio 5.8 Price-earnings ratio 10 Required: 1. Present the balance sheet in common-size format. 2. Present the income statement in common-size format down through net income.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Vishnu
Transcribed Image Text: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:
Lydex Company
Comparative Balance Sheet
This Year
Last Year
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
$ 920,000
0
2,540,000
3,560,000
250,000
7,270,000
9,440,000
$ 1,250,000
300,000
1,640,000
2,100,000
190,000
5,480,000
9,010,000
$ 16,710,000 $ 14,490,000
$ 3,600,000 $ 2,900,000
3,640,000
7,240,000
7,500,000
1,970,000
9,470,000
3,040,000
5,940,000
7,500,000
1,050,000
8,550,000
$ 16,710,000 $ 14,490,000
Lydex Company
Comparative Income Statement and Reconciliation
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
This Year
$ 15,820,000
12,656,000
Last Year
$ 13,180,000
9,885,000
3,164,000
3,295,000
1,000,000
1,588,000
2,164,000
1,707,000
364,000
304,000
1,403,000
420,900
1,260,000
982,100
340,000
491,050
920,000
491,050
1,050,000
558,950
1,800,000
540,000
$ 1,970,000 $ 1,050,000
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
Average collection period
2.3
1.2
40 days
Average sale period
60 days
Return on assets
8.8%
Debt-to-equity ratio
0.67
Times interest earned ratio
5.8
Price-earnings ratio
10
Required:
1. Present the balance sheet in common-size format.
2. Present the income statement in common-size format down through net income.
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