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

ID: 2499191 • Letter: Y

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 $76 per share and that at the end of last year it was $44. 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.)

Explanation / Answer

This year Last year Net operating income(EBIT) 1560000.00 1602000.00 Interest expense 360000.00 300000.00 The times interest earned ratio. EBIT/interest 4.33 5.34 Debt 7520000.00 5800000.00 Total stockholders' equity 8780000.00 8290000.00 The debt-to-equity ratio. 0.86 0.70 Gross margin 3154000.00 3170000.00 Sales (all on account) 15770000.00 12680000.00 The gross margin percentage. Gross margin/sales 0.20 0.25 Total assets 16300000.00 14090000.00 return on total assets = EBIT/Total assets 0.10 0.11 Net income 840000.00 911400.00 return on equity Net Income/Shareholder's Equity 0.10 0.11 Financial leverage: rate of return that is higher than the rate of interest Positive Positive Shares outstanding 100000.00 100000.00 7000000/70 Earning per share(netincome/ shares oustanding 8.40 9.11 Common dividends 350000.00 455700.00 Dividend per share 3.50 4.56 Share price 76.00 44.00 Dividend Yield(Dividend Per Share/Current Share Price) 0.05 0.10 The dividend payout ratio.(Dividend Per Share/earning per share 0.42 0.50 The price-earnings ratio.(Share price/Earning per share) 9.05 4.83 book value per share (Stockholders' Equity/share outstanding) 87.80 82.90 Current Asset 6960000.00 5130000.00 Current liabilites 3920000.00 2800000.00 Waorking capital(Current asset-current liabilites) 3040000.00 2330000.00 The current ratio.(Current asset/current liabilites) 1.78 1.83 Inventory 3510000.00 2100000.00 Prepaid expenses 240000.00 180000.00 The acid-test ratio.(Current asset-inventories-prepaid expenses/current liabilites) 0.82 1.02 Accounts receivable average 1960000.00 1890000.00 Collection period : 365*average AR/sales 45.36 54.40 operating cycle: Purchases 12616000.00 9510000.00 Average inventory 2332500.00 2216250.00 Average sale period (365/purchases*Average inventories) 67.48 85.06 operating cycle: 112.85 139.47 (365/purchases*Average inventories)+(365/credit sales*Average AR) Average total assets 15410000.00 15195000.00 total asset turnover net sales/Average total assets 1.02 0.83

Navigate

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

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.

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

Question

Explanation / Answer

Related Questions

Navigate