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.)

You decide next to assess the company’s stock market performance. Assume that Lydex’s stock price at the end of this year is $72 per share and that at the end of last year it was $40. 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.)

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

Lydex Company Formula This Year   Last Year a Times Interest Earned   =EBIT/Interest expense                   4.33                  3.40 b Debt Equity Ratio= =Total Debt (Liability)/Equity                   0.78                  0.63 c Gross Margin % =Gross Profit/sales= 20.00% 20.7% d Return on Total Assets =Net Income/Avg Assets Average Assets      15,990,000     13,920,000 ROA = 5.25% 3.62% e Return on Equity =Net income/Avg Stock holders equity Average stockholders equity         9,360,000        9,084,000 ROE= 9.0% 5.5% Share Price at the end of Year                       72                      40 No of outstanding common stocks            100,000           100,000 a EPS   =Net Income/Outstanding shares $               8.40 $              5.04 b Dividend yield   =Dividend per share/Price Dividend paid to common stockholders            360,000           252,000 DPS = $               3.60 $              2.52 Dividend Yield= 5.00% 6.30% c Dividend Payout Ratio= Dividend paid/Net Income= 42.86% 50.00% d P/E ratio= =Price per share/EPS=                   8.57                  7.94 e Book Value per share= Stockholders Equity/Outstanding shares $             96.00 $            91.20

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