Ans. A | Time interest earned = Net operating income / Interest expenses | ||||
This year | $1,566,000 / $366,000 | 4.28 | times | ||
Last year | $1,749,000 / $306,000 | 5.72 | times | ||
Ans. B | Debt to equity ratio = Total liabilities / Total stockholder's equity | ||||
This year | $7,650,000 / $9,220,000 | 0.83 | |||
Last year | $6,000,000 / $8,720,000 | 0.69 | |||
Ans. C | Gross margin percentage = Gross margin / Net sales * 100 | ||||
This year | $3,168,000 / $15,840,000 * 100 | 20.0% | |||
Last year | $3,345,000 / $13,380,000 * 100 | 25.0% | |||
Ans. D | Return on assets = Net income / Average assets * 100 | ||||
This year | $840,000 / $15,795,000 * 100 | 5.3% | |||
Last year | $1,010,100 / $13,885,000 * 100 | 7.3% | |||
*Average assets = (Beginning assets + Ending assets) / 2 | |||||
This year | ($14,720,000 + $16,870,000) / 2 | $15,795,000 | |||
Last year | ($13,050,000 + $14,720,000) / 2 | $13,885,000 | |||
Ans. E | Return on Common stockholder's equity = Net income / Average Common stockholder's equity * 100 | ||||
This year | $840,000 / $8,970,000 * 100 | 9.4% | |||
Last year | $1,010,100 / $8,467,475 * 100 | 11.9% | |||
* Average Stockholder's equity = (Beginning equity + Ending equity) / 2 | |||||
This year | ($8,720,000 + $9,220,000) / 2 | $8,970,000 | |||
Last year | ($8,214,950 + $8,720,000) / 2 | $8,467,475 | |||
Ans. F | This year | Positive | |||
Last year | Positive | ||||
Explanations: The return on equity is greater than the return on assets, so the | |||||
financial leverage is positive in both years. | |||||
Return on equity > Return on assets = Positive financial leverage | |||||
Return on equity < Return on assets = Negative financial leverage | |||||
Required information [The following information applies to the questions displayed below.] You have just been hired...
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 This Year Last Year Assets Current assets: Cash $ 940,000 $ 1,180,000...
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 This Year Last Year $ 940,000 2,620,000 3,580,000 250,000 7,390,000 9,480,000 $...
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 This Year Last Year $ 940,000 2,620,000 3,580,000 250,000 7,390,000 9,480,000 $...
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 This Year Last Year $ 980,000 2,780,000 3,620,000 260,000 7,640,000 9,560, 000...
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 This Year Last Year $ 1,040,000 0 3,020,000 3,680,000 270,000 8,010,000 9,680,000...
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 This Year Last Year Assets Current assets: $ 1,140,000 300,000 1,560,000 2,400,000...
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 This Year Last Year $ 980,000 2,780,000 3,620,000 260,000 7,640,000 9,560,000 $17,...
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 This Year Last Year Assets Current assets: Cash $ 880,000 $ 1,120,000...
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: Last Year Lydex Company Comparative Balance Sheet This Year Assets Current assets: Cash $ 900,000 Marketable securities...
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 This Year Last Year $ 1,040,000 0 3,020,000 3,680,000 270,000 8,010,000 9,680,000...