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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: $ 1,020,000 Cash Marketable securities Accounts receivable, net Inventory 2,940,000 3,660,000 270,000 $ 1,320,000 300,000 2,040,000 2,100,000 210,000 Prepaid expenses Total current assets 7,890,000 9,640,000 5,970,000 9,110,000 Plant and equipment, net Total assets $17,530,000 $ 15,080,000 Liabilities and Stockholders' Equity Liabilities: $ 4,070,000 3,700,000 $ 2,450,000 3,100,000 Current liabilities Note payable, 10% Total liabilities 7,770,000 5,550,000 Stockholders' equity: Common stock, $75 par value Retained earnings 7,500,000 2,260,000 7.500,000 2,030,000 Total stockholders' equity 9,760,000 9,530,000 Total liabilities and stockholders' equity $17,530,000 $ 15,080,000 Lydex Company Comparative Income Statement and Reconciliation This Year Sales (all on account) Cost of goods sold $ 15,920,000 12,736,000 Last Year $ 14,180,000 10,635,000 Gross margin Selling and administrative expenses 3,184,000 2,028,286 3,545,000 1,628,000 Net operating income Interest expense 1,155,714 370,000 1,917,000 310,000 Net income before taxes Income taxes (30%) 785,714 235,714 1,607,000 482,100 Net income Common dividends 550,000 320,000 1,124,900 562,450 Net income retained Beginning retained earnings 562,450 1,467,550 230.000 2,030,000 Ending retained earnings $ 2,260,000 $ 2,030,000 To begin your assigment you gather the following financial data and ratios that are typical of companies in I ydex Company's industry

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: $ 1,020,000 Cash Marketable securities Accounts receivable, net Inventory 2,940,000 3,660,000 270,000 $ 1,320,000 300,000 2,040,000 2,100,000 210,000 Prepaid expenses Total current assets 7,890,000 9,640,000 5,970,000 9,110,000 Plant and equipment, net Total assets $17,530,000 $ 15,080,000 Liabilities and Stockholders' Equity Liabilities: $ 4,070,000 3,700,000 $ 2,450,000 3,100,000 Current liabilities Note payable, 10% Total liabilities 7,770,000 5,550,000 Stockholders' equity: Common stock, $75 par value Retained earnings 7,500,000 2,260,000 7.500,000 2,030,000 Total stockholders' equity 9,760,000 9,530,000 Total liabilities and stockholders' equity $17,530,000 $ 15,080,000 Lydex Company Comparative Income Statement and Reconciliation This Year Sales (all on account) Cost of goods sold $ 15,920,000 12,736,000 Last Year $ 14,180,000 10,635,000 Gross margin Selling and administrative expenses 3,184,000 2,028,286 3,545,000 1,628,000 Net operating income Interest expense 1,155,714 370,000 1,917,000 310,000 Net income before taxes Income taxes (30%) 785,714 235,714 1,607,000 482,100 Net income Common dividends 550,000 320,000 1,124,900 562,450 Net income retained Beginning retained earnings 562,450 1,467,550 230.000 2,030,000 Ending retained earnings $ 2,260,000 $ 2,030,000 To begin your assigment you gather the following financial data and ratios that are typical of companies in I ydex Company's industry

Financial And Managerial Accounting
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter4: The Accounting Cycle
Section: Chapter Questions
Problem 2MAD: Analyze and compare Zynga, Electronic Arts, and Take-Two Data (in millions) from recent financial...
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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 $ 1,020,000 $ 1,320,000 300,000 2,040,000 2,100,000 210,000 Marketable securities Accounts receivable, net Inventory Prepaid expenses 2,940,000 3,660,000 270,000 7,890,000 9,640,000 5,970,000 9,110,000 Total current assets Plant and equipment, net Total assets $17,530,000 $ 15,080,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 4,070,000 3,700,000 $ 2,450,000 3,100,000 Note payable, 10% Total liabilities 7,770,000 5,550,000 Stockholders' equity: Common stock, $75 par value Retained earnings 7,500,000 2,260,000 7,500,000 2,030,000 Total stockholders' equity 9,760,000 9,530,000 Total liabilities and stockholders' equity $17,530,000 $ 15,080,000 Lydex Company Comparative Income Statement and Reconciliation This Year Sales (all on account) Cost of goods sold $ 15,920,000 12,736,000 Last Year $ 14,180,000 10,635,000 Gross margin Selling and administrative expenses 3,184,000 2,028,286 3,545,000 1,628,000 Net operating income Interest expense 1,155,714 370,000 1,917,000 310,000 Net income before taxes 785,714 235,714 1,607,000 482,100 Income taxes (30%) 550,000 320,000 1,124,900 562,450 Net income Common dividends Net income retained Beginning retained earnings 230.000 562,450 1,467,550 2,030,000 Ending retained earnings $ 2.260.000 $ 2,030,000 To begin your assigment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry: Current ratio Acid-test ratio Average collection period Average sale period Return on assets 2.3 1.2 32 days 60 days 9.9 % Debt-to-equity ratio Times interest earned ratio 0.67 5.9 Price-earnings ratio 10
Transcribed Image Text: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 $ 1,020,000 $ 1,320,000 300,000 2,040,000 2,100,000 210,000 Marketable securities Accounts receivable, net Inventory Prepaid expenses 2,940,000 3,660,000 270,000 7,890,000 9,640,000 5,970,000 9,110,000 Total current assets Plant and equipment, net Total assets $17,530,000 $ 15,080,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 4,070,000 3,700,000 $ 2,450,000 3,100,000 Note payable, 10% Total liabilities 7,770,000 5,550,000 Stockholders' equity: Common stock, $75 par value Retained earnings 7,500,000 2,260,000 7,500,000 2,030,000 Total stockholders' equity 9,760,000 9,530,000 Total liabilities and stockholders' equity $17,530,000 $ 15,080,000 Lydex Company Comparative Income Statement and Reconciliation This Year Sales (all on account) Cost of goods sold $ 15,920,000 12,736,000 Last Year $ 14,180,000 10,635,000 Gross margin Selling and administrative expenses 3,184,000 2,028,286 3,545,000 1,628,000 Net operating income Interest expense 1,155,714 370,000 1,917,000 310,000 Net income before taxes 785,714 235,714 1,607,000 482,100 Income taxes (30%) 550,000 320,000 1,124,900 562,450 Net income Common dividends Net income retained Beginning retained earnings 230.000 562,450 1,467,550 2,030,000 Ending retained earnings $ 2.260.000 $ 2,030,000 To begin your assigment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry: Current ratio Acid-test ratio Average collection period Average sale period Return on assets 2.3 1.2 32 days 60 days 9.9 % Debt-to-equity ratio Times interest earned ratio 0.67 5.9 Price-earnings ratio 10
Required: 1. Present the balance sheet in common-size format. (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 Balance Sheets This Year Last Year Assets Current assets: Cash % % Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets 0.0 0.0 Plant and equipment, net Total assets 0.0 % 0.0 % Liabilities and Stockholders' Equity Liabilities: Current liabilities % Note payable, 10% Total liabilities 0.0 0.0 Stockholders' equity: Common stock, $75 par value Retained earnings Total stockholders' equity 0.0 0.0 Total liabilities and equity 0.0 % 0.0 % 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 Net income before taxes Income taxes (30%) Net income % %
Transcribed Image Text:Required: 1. Present the balance sheet in common-size format. (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 Balance Sheets This Year Last Year Assets Current assets: Cash % % Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets 0.0 0.0 Plant and equipment, net Total assets 0.0 % 0.0 % Liabilities and Stockholders' Equity Liabilities: Current liabilities % Note payable, 10% Total liabilities 0.0 0.0 Stockholders' equity: Common stock, $75 par value Retained earnings Total stockholders' equity 0.0 0.0 Total liabilities and equity 0.0 % 0.0 % 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 Net income before taxes Income taxes (30%) Net income % %
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