Question

HomeWUIK 1 Check my work Required information [The following information applies to the questions displayed below. 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 is Year Last Year $ 930,000 930,000 0 2,580,000 3,570,000 250.000 7,330,000 9,460,000 $16,790,000 $ 1,170,000 300,000 1,680,000 2,200,000 190,000 5,540,000 9,020,000 $14,560,000 Assets Current assets Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 108 Total liabilities Stockholders' equity: Common stock, $70 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 3,980,000 3,640,000 7,620,000 $2,920,000 3,040,000 5,960,000 7,000,000 7,000,000 2,170,000 1,600,000 9,10,0008 ,600,000 $16,790,000 $14,560,000 < Prev 2 3 of 3 !!! Next >

Answer 1

3.a.Working Capital = Current Assets - Current Liabilities

This Year = 7330000 - 3980000 = 3350000

Last Year = 5540000 - 2920000 = 2620000

3.b.Current Ratio = Current Assets / Current Liabilities

This Year = 7330000 / 3980000 = 1.84

Last Year = 5540000 / 2920000 = 1.897 ~ 1.90

3.c..Acid Test Ratio = Quick Assets / Current Liabilities

This Year = (930000 + 2580000) / 3980000 = 0.881

Last Year = (1170000 + 300000 + 1680000) / 2920000 = 1.08

3.d.Average Collection Period = 365 / (Sales / Avg.Accounts Receivable)

This Year = 365 / ( 15830000 / (2580000 + 1680000 ) / 2 ) = 365 / (15830000 / 2130000 ) = 365 / 7.43 = 49.13 Days

Last Year = 365 / ( 13280000 / (1640000 + 1680000 ) / 2 ) = 365 / (13280000 / 1660000 ) = 365 / 8 = 45.63 Days

3.e.Average Sale Period = 365 / (Cost of goods sold / Avg.Inventory)

This Year = 365 / ( 12664000 / (3570000 + 2200000 ) / 2 ) = 365 / (12664000 / 2885000 ) = 365 / 4.39 = 83.14 Days

Last Year = 365 / ( 9960000 / (2000000 + 2200000 ) / 2 ) = 365 / (9960000 / 2100000 ) = 365 / 4.74 = 77 Days

3.f.Operating Cycle = Average Collection Period + Average Sale Period

This Year = 49.13 Days + 83.14 Days = 132.27 Days

Last Year = 45.63 Days + 77 Days = 122.63 Days

3.g.Total Asset Turnover = Sales / Avg.Total Assets

This Year = 15830000 / (16790000 + 14560000 ) / 2 = 15830000 / 15675000 = 1.009

Last Year = 13280000 / ( 14560000 + 14580000 ) / 2 = 13280000 / 8070000 = 1.65

2.a.Earning per share = Net Income / No. of oustanding shares

This Year = 980000 / 100000 = 9.8

Last Year = 996800 / 100000 = 9.97

2.b.Dividend Yield Ratio = Dividend per share / Market price per share

This Year = (410000 / 100000 ) / 88 = 4.1 / 88 = 4.66%

Last Year = ( 498400 / 100000 ) / 56 = 4.98 / 56 = 8.9%

2.c.Dividend payout Ratio = Dividend / Net Income

This Year = 410000 / 980000 = 41.84%

Last Year = 498400 / 996800 = 50%

2.d.Price Earning Ratio = Market Price per share / EPS

This Year = 88 / 9.8 = $8.98

Last Year = 56 / 9.97 = $5.62

2.e.Book value per share = Total Stockholders Equity / No. of oustanding shares

This Year = 9170000 / 100000 = $91.70

Last Year = 8600000 / 100000 = $86