Lydex Company Comparative Balance Sheet This Year Last Year Assets Current asset
ID: 2477967 • Letter: L
Question
Lydex Company Comparative Balance Sheet This Year Last Year Assets Current assets: Cash $ 910,000 $ 1,150,000 Marketable securities 0 300,000 Accounts receivable, net 2,500,000 1,600,000 Inventory 3,550,000 2,000,000 Prepaid expenses 250,000 190,000 Total current assets 7,210,000 5,240,000 Plant and equipment, net 9,420,000 9,000,000 Total assets $ 16,630,000 $ 14,240,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 3,960,000 $ 2,880,000 Note payable, 10% 3,640,000 3,040,000 Total liabilities 7,600,000 5,920,000 Stockholders' equity: Common stock, $70 par value 7,000,000 7,000,000 Retained earnings 2,030,000 1,320,000 Total stockholders' equity 9,030,000 8,320,000 Total liabilities and stockholders' equity $ 16,630,000 $ 14,240,000 Lydex Company Comparative Income Statement and Reconciliation This Year Last Year Sales (all on account) $ 15,810,000 $ 13,080,000 Cost of goods sold 12,648,000 9,810,000 Gross margin 3,162,000 3,270,000 Selling and administrative expenses 1,298,000 1,584,000 Net operating income 1,864,000 1,686,000 Interest expense 364,000 304,000 Net income before taxes 1,500,000 1,382,000 Income taxes (30%) 450,000 414,600 Net income 1,050,000 967,400 Common dividends 340,000 483,700 Net income retained 710,000 483,700 Beginning retained earnings 1,320,000 836,300 Ending retained earnings $ 2,030,000 $ 1,320,000
You decide next to assess the company’s stock market performance. Assume that Lydex’s stock price at the end of this year is $84 per share and that at the end of last year it was $52. For both this year and last year, compute: (Round your intermediate calculations and final answers to 2 decimal places. For percentages 0.1234 should be considered as 12.34%.)
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 decide next to assess the company’s stock market performance. Assume that Lydex’s stock price at the end of this year is $84 per share and that at the end of last year it was $52. For both this year and last year, compute: (Round your intermediate calculations and final answers to 2 decimal places. For percentages 0.1234 should be considered as 12.34%.)
Explanation / Answer
This Year Last Year The earnings per share.N/p after tax/No.of common shares 1050000/100000 967400/100000 10.5 9.674 The dividend yield ratio. Dividend per Share/Current Market Price (340000/100000)/84*100 (483700/100000)/52*100 4.05 9.30 The dividend payout ratio. Total dividends/Net Income after tax 340000/1050000*100 483700/967400*100 32.38 50 The price-earnings ratio. Market PricePer share/Earnings per Share 84/10.5 52/9.674 8 5.375 The book value per share of common stock. Stock-holders' Equity/Av. Shares O.s 9030000/100000 8320000/100000 90.3 83.2 This Year Last Year a. Working Capital = Current Assets- Current Liabilities Current Assets 7210000 5240000 Current Liabilities 3960000 2880000 Working Capital 3250000 2360000 b. Current Ratio= Current assets/Current Liabilities 7210000/3960000 5240000/2880000 1.82 1.82 c.Acid-test ratio=(CurrentAssets-Inventory&prepaid Expenses)/Current Liabilities (7210000-3800000)/3960000 (5240000-2190000)/2880000 0.86 1.06 d.The average collection period 365/Credit Sales* Av. Accounts Receivables ,where 365/15810000*((2500000+1600000)/2) 365/13080000*((1600000+1620000)/2) Av. Accounts Receivables=( Op.+Cl )/2 47 45 e.The average sale period. (The inventory at the beginning of last year totaled $1,980,000.) 365/COGS* Av.Inventory, Where 365/12648000*((3550000+2000000)/2) 365/9810000*((2000000+1980000)/2) Av.Inventory= (OP+Cl)/2 80 74 f.The operating cycle= Av. Sale period+ Av. Collection period 47+80 45+74 127 119 g.The total asset turnover. (The total assets at the beginning of last year totaled $13,020,000.) Sales/Total assets 15810000/16630000 13080000/14240000 0.95 0.92
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