2. Present the income statement in common-size format down through net income. (Round your percentage answers to 1 decimal place i.e., 0.123 is considered as 12.3. Due to rounding, figures may not fully reconcile down a column.) Lydex Company Common-Size Income Statements This Year Last Year Sales % Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense
2. Present the income statement in common-size format down through net income. (Round your percentage answers to 1 decimal place i.e., 0.123 is considered as 12.3. Due to rounding, figures may not fully reconcile down a column.) Lydex Company Common-Size Income Statements This Year Last Year Sales % Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 25BEB: Jasmine Company provided the following income statements for its first 3 years of operation: Refer...
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Can I please have help answering #2. The financial statements are below, and the question is in the screen shot. Thank you
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 | $ | 820,000 | $ | 1,060,000 |
Marketable securities | 0 | 300,000 | ||
Accounts receivable, net | 2,860,000 | 1,960,000 | ||
Inventory | 3,640,000 | 2,400,000 | ||
Prepaid expenses | 270,000 | 210,000 | ||
Total current assets | 7,590,000 | 5,930,000 | ||
Plant and equipment, net | 9,600,000 | 9,090,000 | ||
Total assets | $ | 17,190,000 | $ | 15,020,000 |
Liabilities and |
||||
Liabilities: | ||||
Current liabilities | $ | 4,050,000 | $ | 3,060,000 |
Note payable, 10% | 3,700,000 | 3,100,000 | ||
Total liabilities | 7,750,000 | 6,160,000 | ||
Stockholders' equity: | ||||
Common stock, $75 par value | 7,500,000 | 7,500,000 | ||
|
1,940,000 | 1,360,000 | ||
Total stockholders' equity | 9,440,000 | 8,860,000 | ||
Total liabilities and stockholders' equity | $ | 17,190,000 | $ | 15,020,000 |
Lydex Company Comparative Income Statement and Reconciliation |
||||
This Year | Last Year | |||
Sales (all on account) | $ | 15,900,000 | $ | 13,980,000 |
Cost of goods sold | 12,720,000 | 10,485,000 | ||
Gross margin | 3,180,000 | 3,495,000 | ||
Selling and administrative expenses | 1,410,000 | 1,620,000 | ||
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Net operating income | 1,770,000 | 1,875,000 | ||
Interest expense | 370,000 | 310,000 | ||
Net income before taxes | 1,400,000 | 1,565,000 | ||
Income taxes (30%) | 420,000 | 469,500 | ||
Net income | 980,000 | 1,095,500 | ||
Common dividends | 400,000 | 547,750 | ||
Net income retained | 580,000 | 547,750 | ||
Beginning retained earnings | 1,360,000 | 812,250 | ||
Ending retained earnings | $ | 1,940,000 | $ | 1,360,000 |
To begin your assigment you gather the following financial data and ratios that are typical of companies in Lydex Company’s industry: |
|
2.3 | |
Acid-test ratio | 1.2 | |
Average collection period | 32 | days |
Average sale period | 60 | days |
Return on assets | 9.7 | % |
Debt-to-equity ratio | 0.65 | |
Times interest earned ratio | 5.7 | |
Price-earnings ratio | 10 | |
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