Question

Required information [The following information applies to the questions displayed below.) Part 1 of 3 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: 6.66 points Lydex Company Comparative Balance Sheet This Year Last Year eBook $ 1,040,000 Print 3,020,000 3,680,000 270,000 8,010,000 9,680,000 $17,690,000 $1,280,000 300,000 2,120,000 2,300,000 210,000 6,210,000 9 , 130,000 $15, 340,000 References 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, $75 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 4,090,000 3,720,000 7,810,000 $ 3, 140,000 3,120,000 6,260,000 7,500,000 2,380,000 9,880,000 $17,690,000 7,500,000 1.580.000 9,080,000 $15, 340,000

Answer 1

Ans:

S.NO	Particulars	Formula	This year	Last year
1	The Times Interest Earned Ratio	Net Operating Income	1,972,000	1,959,000
		÷	÷	÷
		Interest Expense	372,000	312,000
			5.30	6.28	Times
2	Debt to Equity Ratio	Total liabilties	7,810,000	6,260,000
		÷	÷	÷
		Total stock holder's Equity	9,880,000	9,080,000
			0.79	0.69
3	Gross Margin Percentage	Gross Margin	3,188,000	3,595,000
		÷	÷	÷
		Net Sales	15,940,000	14,380,000
			20%	25%
4	Return on Total Assets	Net Income	1,120,000	1,152,900
		÷	÷	÷
		Avg.Total Assets	16515000	14245000
			6.8%	8.1%
5	Return on Equity	Net Income	1,120,000	1,152,900
		÷	÷	÷
		Avg.Total Equity	9480000	8791775
			11.8%	13.1%
6	Financial Leverage	Operating Income	1,972,000	1,959,000
		÷	÷	÷
		Net Income before taxes	1,600,000	1,647,000
			1.23	1.19
			Positive	Positive