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:

ou 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?

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 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

Lydex Company Formula This Year   Last Year a Times Interest Earned   =EBIT/Interest expense                        5.12                      5.55 b Debt Equity Ratio= =Total Debt (Liability)/Equity                        0.84                      0.71 c Gross Margin % =Gross Profit/sales= 20.00% 25.0% d Return on Total Assets =Net Income/Avg Assets Average Assets           15,435,000         13,630,000 ROA = 6.80% 7.10% e Return on Equity =Net income/Avg Stock holders equity Average stockholders equity              8,675,000           8,078,150 ROE= 12.1% 12.0% Share Price at the end of Year                            84                         52 No of outstanding common stocks                 100,000               100,000 a EPS   =Net Income/Outstanding shares $                  10.50 $               13.82 b Dividend yield   =Dividend per share/Price Dividend paid to common stockholders                 340,000               483,700 DPS = $                    3.40 $                 4.84 Dividend Yield= 4.05% 9.30% c Dividend Payout Ratio= Dividend paid/Net Income= 32.38% 50.00% d P/E ratio= =Price per share/EPS=                        8.00                      3.76 e Book Value per share= Stockholders Equity/Outstanding shares $                  90.30 $               83.20

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