Chapter 13 Homework Questions 1-3 (of 4) The following information applies to th

Question

Chapter 13 Homework Questions 1-3 (of 4) 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 Marketable securities Accounts receivable, net Inventory Prepaid expenses $ 1,050,000 0 3,060,000 3,400,000 240,000 1,290,000 300,000 2,160,000 2,400,000 220,000 Total current assets Plant and equipment, net 7.750,000 9,700,000 6,370,000 9,140,000 Total assets $17,450,000 15,510,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 10% $ 4,400,000 3,720,000 3,160,000 3,120,000 Total liabilities 8,120,000 6,280,000

Explanation / Answer

This Last 1) Ratios: Year Year a) The times interest earned ratio 3.42 6.35 b) The Debt Equity Ratio 0.40 0.34 c) The Gross Margin % 20.0 25.0 d) The Return on Total Assets 5.4 9.7 e) The Return on Equity 6.8 13.06 f) Financial leverage Negative Negative 2) a) EPS 6.30 11.68 b) Dividend Yield Ratio (%) 4.73 7.30 c) Dividend Pay out ratio (%) 84.13 0.50 d) Price Earnings Ratio 17.78 6.85 e) Book Value of Common Stock 93.3 92.30 3) a) Working Capital 3350000 3210000 b) Current Ratio 1.76 2.02 c) Acid test ratio 0.93 1.19 d) Average Collection Period 59.73 49.41 e) Average Sales period 82.95 75.96 f) The Operating Cycle 142.68 125.37 g)The Total Assets Turnover 0.97 1.01

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