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 next to assess the company’s stock market performance. Assume that Lydex’s stock price at the end of this year is $102 per share and that at the end of last year it was $70. 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 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

2 a. Earnings per share=Net income/Number of common stock outstanding This Year Last Year 1) Net income 980000 1095500 2) Common stock 7500000 7500000 3) Par value 75 75 4) Number of common stock (2/3) 100000 100000 5) Earnings per share (1/4) 9.8 10.96 b. Dividend yield ratio=Dividend per share/Price per share This Year Last Year 1) Dividend 400000 547750 2) Number of common stock 100000 100000 3) Dividend per share (1/2) 4 5.48 4)Price per share 102 70 5) Dividend yield ratio 3.92% 7.83% c. Dividend payout ratio=Dividend/Net income This year=400000/980000=40.82% Last year=547750/1095500=50% d. Price earning ratio=Market value per share/Earnins per share This year=102/9.8=10.41 Last year=70/10.96=6.39 e. Bookvalue per share=Shareholder's equity/Number of common stock This year=9620000/100000=$96.2 per share Last year=9040000/100000=$90.4 per share

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