You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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: Lydex Company Comparative Balance Sheet This Year Last Year Assets Current assets: Cash Marketable securities Accounts receivable, not Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 10% Total liabilities Stockholders' equity: Common stock, $70 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 1,010,000 2,980,000 3,650,000 270,000 7,830,000 9,620,000 $ 17,450,000 $ 1,250,000 300,000 2,000,000 2,000,000 210,000 5,760,000 9,100,000 $ 14,860,000 $ 4,060,000 3,700,000 7,760,000 7,000,000 2,650,000 9,690,000 $ 17,450,000 $ 3,088,000 3,100,000 6,180,000 7,000,000 1,680,000 8,680,000 $ 14,860,000 Lydex Company Comparative Income Statement and Reconciliation Sales (all on account) Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net incone before taxes Income taxes (10%) Net incone Common dividends Net income retained Beginning retained earnings Ending retained earnings This Year $ 15,910,000 12,728,000 3,182,000 912,800 2,270,000 378,000 1,980,000 570,000 1,330,000 328,000 1,010,000 1,680,000 $ 2,690,000 Last Year $ 14,088,000 10,560,000 3,520,000 1,624,000 1,896,000 310,000 1,585,000 475,800 1,118,200 555,180 555,100 1,124,980 $ 1,688,000 To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry: Current ratio Acid test ratio 2.3 1.1 Average collection period 32 days Average sale period 60 days Return on assets 9.8% Debt to equity ratio. 8.7 Times interest earned ratio 5.8 Price earnings ratio 18 Problem 14-15 Part 3 (Algo) 3. You decide, finally, to assess the company's liquidity and asset management. For both this year and last year, compute: a. Working capital. b. The current ratio. (Round your final answers to 2 decimal places.) c. The acid-test ratio. (Round your final answers to 2 decimal places.) d. The average collection period. (The accounts receivable at the beginning of last year totaled $1,720,000.) (Use 365 days in a year. Round your Intermediate calculations and final answers to 2 decimal place.) e. The average sale period. (The inventory at the beginning of last year totaled $2,080,000.) (Use 365 days in a year. Round your Intermediate calculations and final answers to 2 decimal place.) f. The operating cycle. (Round your Intermediate calculations and final answers to 2 decimal place.) g. The total asset turnover. (The total assets at the beginning of last year totaled $13,120,000.) (Round your final answers to 2 decimal places.) a. Working capital This Year Last Year 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: Lydex Company Comparative Balance Sheet This Year Last Year Assets Current assets: Cash Marketable securities Accounts receivable, not Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 10% Total liabilities Stockholders' equity: Common stock, $70 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 1,010,000 2,980,000 3,650,000 270,000 7,830,000 9,620,000 $ 17,450,000 $ 1,250,000 300,000 2,000,000 2,000,000 210,000 5,760,000 9,100,000 $ 14,860,000 $ 4,060,000 3,700,000 7,760,000 7,000,000 2,650,000 9,690,000 $ 17,450,000 $ 3,088,000 3,100,000 6,180,000 7,000,000 1,680,000 8,680,000 $ 14,860,000 Lydex Company Comparative Income Statement and Reconciliation Sales (all on account) Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net incone before taxes Income taxes (10%) Net incone Common dividends Net income retained Beginning retained earnings Ending retained earnings This Year $ 15,910,000 12,728,000 3,182,000 912,800 2,270,000 378,000 1,980,000 570,000 1,330,000 328,000 1,010,000 1,680,000 $ 2,690,000 Last Year $ 14,088,000 10,560,000 3,520,000 1,624,000 1,896,000 310,000 1,585,000 475,800 1,118,200 555,180 555,100 1,124,980 $ 1,688,000 To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry: Current ratio Acid test ratio 2.3 1.1 Average collection period 32 days Average sale period 60 days Return on assets 9.8% Debt to equity ratio. 8.7 Times interest earned ratio 5.8 Price earnings ratio 18 Problem 14-15 Part 3 (Algo) 3. You decide, finally, to assess the company's liquidity and asset management. For both this year and last year, compute: a. Working capital. b. The current ratio. (Round your final answers to 2 decimal places.) c. The acid-test ratio. (Round your final answers to 2 decimal places.) d. The average collection period. (The accounts receivable at the beginning of last year totaled $1,720,000.) (Use 365 days in a year. Round your Intermediate calculations and final answers to 2 decimal place.) e. The average sale period. (The inventory at the beginning of last year totaled $2,080,000.) (Use 365 days in a year. Round your Intermediate calculations and final answers to 2 decimal place.) f. The operating cycle. (Round your Intermediate calculations and final answers to 2 decimal place.) g. The total asset turnover. (The total assets at the beginning of last year totaled $13,120,000.) (Round your final answers to 2 decimal places.) a. Working capital This Year Last Year
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
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,...
-
Following the example from the picture below, do the same for tryptophan and aspartate, consider pk1, pkR and pk2. COOH HSCH Net charge: PH H CH COOH +1 10 8 6 4 2 COOH 0 Glutamate Jpk 2.19 pk 4.25 ...
-
What are the two principal ways by which one can prepare forecast financial statements?
-
The 2-kg ball is thrown at the suspended 20-kg block with a velocity of 4 m/s. If the coefficient of restitution between the ball and the block is e = 0.8, determine the maximum height h to which the...
-
When a party may be compelled to defend an action in a particular court?
-
On January 1, 2014, the ledger of Werth Company contains the following liability accounts. Accounts Payable ......... $35,000 Sales Taxes Payable ........ 5,000 Unearned Service Revenue ..... 12,000...
-
At the beginning of the year the Allowance for doubtful Accounts had a balance of $18,000 During the year $1,600 of Accounts were written off and $5,000 of Accounts previously written off were...
-
Assuming the environment is favorable for thunderstorms, forecasters must be aware of the possibility of pulse severe storms when... Group of answer choices 0-6 km shear is strong and CAPE is high...
-
Explain why engagements to perform agreed-upon procedures are restricted to specified users.
-
Contrast a WebTrust engagement with a SysTrust engagement in terms of the subject matter and the intended users.
-
a. What representations are made by the auditor in the auditor's standard report? b. What circumstances justify the issuance of an unqualified opinion?
-
Describe the four principles of a reliable system included in the criteria used for a SysTrust engagement.
-
a. What are the essential characteristics of a profession? b. Give two examples of each characteristic that enables public accounting to be a profession.
-
For the Session Long Project, you will be applying the concepts from the background materials to your own personal workplace experiences. Instead of writing a paper for the SLP assignments, you will...
-
Will the prediction interval always be wider than the estimation interval for the same value of the independent variable? Briefly explain.
-
Prove that \(C_{P}>C_{V}\), where the notations have their usual meanings.
-
In a chemical process plant, water at 67C is pumped from a storage tank at the rate of 20,000 kg/hr. The motor for the pump expenses work at the rate of 1.5 hp. The water passes through a heat...
-
Derive an expression for the work done if an ideal gas undergoes an adiabatic change.
Study smarter with the SolutionInn App