You have just been hired as a tinancial analyst tor Lydex Company, a manutacture

Question

You have just been hired as a tinancial analyst tor Lydex Company, a manutacturer ot satety 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 $ 920,000 1,250,000 300,000 1,640,000 2,100,000 190,000 ,480,000 9,010,000 $16,710,000 $14,490,000 2,540,000 3,560, 000 250,000 Total current assets Plant and equipment, net Total assetS Liabilities and Stockholders Equity Liabilities: 9,440, 000 Current liabilities Note payable, 108 $ 3,600,000 3,640,000 ,240,000 2,900,000 3,040,000 5,940,000 Total liabilities Stockholders' equity: Common stock, $75 par value Retained earnings 7,500,000 1,050,000 550,000 $16,710,000 $14,490,000 7,500,000 1,970,000 ,470,000 Total stockholders' equity Total liabilities and stockholders' equity Lydex Company Comparative Income Statement and Reconciliation This Year Last Year 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 (308) Net income Common dividends Net income retained Beginning retained earnings Ending retained earnings 15, 820,000 13,180,000 9,885,000 295,000 1,588,000 ,707,000 304,000 12,656,000 r 164,000 1,000,000 r 164,000 364,000 800,000 540,000 420,900 982,100 491,050 491,050 558,950 $1,970,000 1,050,000 ,260, 340,000 920,000 1 , 050 , 000

Explanation / Answer

workings

This Year Last Year Assets current Assets Cash 5.5% 8.6% marketable Security 0.0% 2.1% Account receivable Net 15.2% 11.3% invetory 21.3% 14.5% Prepaid Expense 1.5% 1.3% Total current Asset 43.5% 37.8% Plant and Equipment 56.5% 62.2%

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