Question

I need answers for requirements for 1 & 2

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 $ 880,000 Marketable securities 0 Accounts receivable, net 2,380,000 Inventory 3.520,000 Prepaid expenses 240,000 Total current assets 7,020,000 Plant and equipment, net 9.360,000 Total assets $16,380,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 3,930,000 Note payable, 100 3.620,000 Total liabilities 7.550,000 Stockholders' equity! Conmon stock, $75 par value 7,500,000 Retained earnings 1.330,000 Total stockholders' equity 8.830,000 Total liabilities and stockholders' equity $16,380,000 $ 1,120,000 300,000 1,480,000 2,200,000 180,000 5,280,000 8.970,000 $14,250,000 $ 2,820,000 3,020,000 5,340,000 7,500,000 910,000 8.410.000 $14,250,000

Answer 1

Last Year 7.9%% 2.1% Answer of Requirement 1: Lydex Company Common-Size Balance Sheet This Year Assets Current Assets: Cash 5.4% % Marketable Securities 0.0% Accounts Receivable, net 14.5% Inventory 21.5% Prepaid Expenses 1.5% Total Current Assets 42.9% Plant and Equipment, Net 57.1% Total Assets 100.0% % Liabilities and Stockholders Equity Liabilities: Current Liabilities 24.0% % Note Payable, 10% 22.1% Total Liabilities 46.1% Stockholders Equity: Common Stock, $75 par value 45.8% Retained Earnings 8.1% Total Stockholders Equity 53.9% Total Liabilities and Equity 100.0% % 10.4% 15.4% 1.3% 37.1% 62.9% 100.0% % 19.8% % 21.2% 41.0% 52.6% 6.4% 59.0% 100.0% %

Answer of Requirement 2: Lydex Company Common-Size income Statements This Year Sales 100.0% % Cost of Goods Sold 80.0% Gross Margin 20.0% Selling and Administrative Expenses 11.4% Net Operating Income 8.6% Interest Expense 2.3% Net Income Before Taxes 6.3% Income Taxes (30%) 1.9% Net Income 4.4% % Last Year 100.0% % 75.0% 25.0% 12.3% 12.7% 2.4% 10.3% 3.1% 7.2% %