2 Problem 15-16 Common-Size Financial Statements [L015-1] 12.5 points You have j

Question

2 Problem 15-16 Common-Size Financial Statements [L015-1] 12.5 points 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 eBook This Year Last Year Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses $890,000 1,020,000 300,000 1,520,000 2,300, 000 180,000 5, 320,000 8,980,000 16,460,000 $14,300,000 Print 2,420,000 3,530,000 240,000 7,080,000 9,380,000 References Total current assets Plant and equipment, net Total assets Liabilities and Stockholders Equity Liabilities: Current 1iabilities Note payable, 108 $ 3,960,000 2, 860,000 Total liabilities Stockho1ders' equity: 3,620,000 7,580,000 3,020,000 5,880,000 Common stock, $70 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 7,000,000 1,880, 000 8,880, 000 $16, 460,000 7,000,000 1,420,000 8,420,000 $14, 300,000 Lydex Company Comparative Income Statement and Reconciliation This Year Last Year Sales (all on account) S 15,790,000 12,880,000 Mc Graw Prev 2 of 2-. 2 of 2E Score answer > Score.answer >

Explanation / Answer

Lydex Company Common size Balance Sheet this last year year Assets Current assets: Cash 5.4% 7.1% Marketable securities 0.0% 2.1% Accounts receivable,net 14.7% 10.6% inventory 21.4% 16.1% prepaid expenses 1.5% 1.3% total current assets 43.0% 37.2% plant and equipment,net 57.0% 62.8% Total assets 100.0% 100.0% Liabilities and Stockholders equity liabilities : Current liabilities 24.1% 20.0% Notes payable 22.0% 21.1% total liabilities 46.1% 41.1% Stockholders Equity: common stock ,$70 par value 42.5% 49.0% Retained earnings 11.4% 9.9% total stockholder's Equity 53.9% 58.9% total liabilities and Equity 100.0% 100.0% Common -size Income Statement This last year year Sales 100.0% 100.0% cost of goods sold 80.0% 75.0% gross margin 20.0% 25.0% Selling and administrative expense 10.4% 12.2% net operating income 9.6% 12.8% interest expense 2.3% 2.3% net income before taxes 7.3% 10.4% income taxes(30%) 2.2% 3.1% net income. 5.1% 7.3%

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