You have just been hired as a financial analyst for Lydex Company, a manufacture

Question

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:

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

You decide first to assess the company’s performance in terms of debt management and profitability. Compute the following for both this year and last year: (Round your intermediate calculations and final percentage answers to 1 decimal place. i.e., 0.123 should be considered as 12.3%. Round the rest of the intermediate calculations and final answers to 2 decimal places.)

Is the company’s financial leverage positive or negative?

A

B

C %

D %

E %

F

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 intermediate calculations and final percentage answers to 1 decimal place. i.e., 0.123 should be considered as 12.3%. Round the rest of the intermediate calculations and final answers to 2 decimal places.)

The book value per share of common stock.

You decide, finally, to assess the company’s liquidity and asset management. For both this year and last year, compute: (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.)

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:

Explanation / Answer

1) a) Times interest earned ratio = income before interest and taxes / Interest expense = 1,560,000 / 360,000 = 4.34 times

b) Debt to equity Ratio = Total Liabilities / Total Equity = 7,510,000 / 8,710,000 = 0.86

c) Gross Margin percentage = Gross Margin / Net sales = 3,152,000 /15,760,000 = 20%

d) Return on total asset = Net Income / Avg. total asset = 840,000 / ( (16,220,000 + 12,970,000)/2) = 5.75%

e) Return On Equity = Net Income / Avg. total Equity = 840,000 / ( ( 8,710,000 + 7,701,650) /2) = 10.24%

Note : ask Other parts sepeartely

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