Question

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 $ 1,010,000 0 2,900,000 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 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, 10% Total liabilities Stockholders' equity: Common stock, $70 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 4,060,000 3,700,000 7,760,000 $ 3,080,000 3,100,000 6,180,000 7,000,000 2,690,000 9,690,000 $17,450,000 7,000,000 1,680,000 8,680,000 $14,860,000

Answer 1

Ans. 2
Ans. A	Earnings per share = Net income / Common stock outstanding
	This year	$1,330,000 / 100,000	$13.30	per share
	Last year	$1,110,200 / 100,000	$11.10	per share
	*Common stock outstanding =   Common stock / Par value
		$7,000,000 / $70	100,000
Ans. B	Dividend yield ratio = Dividend per share / Stock price per share * 100
	This year	$3.20 / $104 * 100	3.1%
	Last year	$5.55 / $72 * 100	7.7%
	*Dividend per share = Common dividends / Common stock outstanding
	This year	$320,000 / 100,000	$3.20	per share
	Last year	$555,100 / 100,000	$5.55	per share
Ans. C	Payout ratio =   Total dividends / Net income
	This year	$320,000 / $1,330,000 * 100	25.6%
	Last year	$555,100 / $1,110,200 * 100	50.0%
Ans. D	Price earnings ratio = Stock price per share / Earnings per share
	This year	$104 / $13.30	7.82	times
	Last year	$72 / $11.10	6.49	times
Ans. E	Book value per share =    Total common stockholder's equity / no. of shares outstanding
	This year	$9,690,000 / 100,000	$96.90	per share
	Last year	$8,680,000 / 100,000	$86.80	per share