You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety helmets.
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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 companys financial statements, including comparing Lydexs performance to its major competitors. The companys financial statements for the last two years are as follows:Lydex CompanyComparative Balance SheetThis YearLast YearAssetsCurrent assets:Cash$ $ Marketable securitiesAccounts receivable, netInventoryPrepaid expensesTotal current assetsPlant and equipment, netTotal assets$ $ Liabilities and Stockholders' EquityLiabilities:Current liabilities$ $ Note payable, Total liabilitiesStockholders' equity:Common stock, $ par valueRetained earningsTotal stockholders' equityTotal liabilities and stockholders' equity$ $ Lydex CompanyComparative Income Statement and ReconciliationThis YearLast YearSales all on account$ $ Cost of goods soldGross marginSelling and administrative expensesNet operating incomeInterest expenseNet income before taxesIncome taxes Net incomeCommon dividendsNet income retainedBeginning retained earningsEnding retained earnings$ $ To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Companys industry:Current ratioAcidtest ratioAverage collection perioddaysAverage sale perioddaysReturn on assetsDebttoequity ratioTimes interest earned ratioPriceearnings ratioRequired: You decide first to assess the companys performance in terms of debt management and profitability. Compute the following for both this year and last year: Round your "Percentage" answers to decimal place and other answers to decimal places.a The times interest earned ratio.b The debttoequity ratio.c The gross margin percentage.d The return on total assets. Total assets at the beginning of last year were $e The return on equity. Stockholders equity at the beginning of last year totaled $ There has been no change in common stock over the last two years.f Is the companys financial leverage positive or negative?
Related Book For
Managerial Accounting
ISBN: 978-0077522940
15th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
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