You have just been hired as a financial analyst for Lydex Company, a manufacture
ID: 2400798 • Letter: Y
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:
To begin your assigment you gather the following financial data and ratios that are typical of companies in Lydex 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:
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.) Common-Size Balance Sheets This Year Last Year Assets Current assets Cash Prepaid expenses Total current assets Plant and equipment, net Total assets Liabilities and Stockholders' Equity 0.0 0.0 0.01 % 0.01 % Current liabilities Note payable, 10% Total liabilities 0.0 0.0 Stockholders' equity Common stock, ST0 par value Total stockholders' equity Total liabilities and equity 0.0 0.0 0.01 % 0.01 % 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.) 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 incomeExplanation / Answer
Lydex company
Common size Balance Sheet
This Year
Last Year
Assets
Current assets:
Cash
930,000
5.5%
1,170,000
8%
Marketable securities
0
0%
300,000
2.1%
Accounts receivable, net
2,580,000
15.3%
1,680,000
11.5%
Inventory
3,570,000
21.3%
2,200,000
15.1%
Prepaid expenses
250,000
1.49%
190,000
1.3%
Total current assets
7,330,000
43.6%
5,540,000
38%
Plant and equipment, net
9,460,000
56.4%
9,020,000
62%
Total assets
16,790,000
100%
14,560,000
100%
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities
3,980,000
23.7%
2,920,000
20.1%
Note payable, 10%
3,640,000
21.7%
3,040,000
20.9%
Total liabilities
7,620,000
45.4%
5,960,000
41%
Stockholders' equity:
Common stock, $70 par value
7,000,000
41.7%
7,000,000
48%
Retained earnings
2,170,000
12.9%
1,600,000
11%
Total stockholders' equity
9,170,000
54.6%
8,600,000
59%
Total liabilities and stockholders' equity
16,790,000
100%
14,560,000
100%
Lydex Company
Common size Income Statement
This Year
Last Year
Sales (all on account)
15,830,000
100%
13,280,000
100%
Cost of goods sold
12,664,000
(80%)
9,960,000
(75%)
Gross margin
3,166,000
20%
3,320,000
25%
Selling and administrative expenses
1,402,000
(8.9%)
1,592,000
(12%)
Net operating income
1,764,000
11.1%
1,728,000
13%
Interest expense
364,000
(2.3%)
304,000
(2.3%)
Net income before taxes
1,400,000
8.8%
1,424,000
10.7%
Income taxes (30%)
420,000
(2.7%)
427,200
(3.2%)
Net income
980,000
6.1%
996,800
Common size Balance Sheet
This Year
Last Year
Assets
Current assets:
Cash
930,000
5.5%
1,170,000
8%
Marketable securities
0
0%
300,000
2.1%
Accounts receivable, net
2,580,000
15.3%
1,680,000
11.5%
Inventory
3,570,000
21.3%
2,200,000
15.1%
Prepaid expenses
250,000
1.49%
190,000
1.3%
Total current assets
7,330,000
43.6%
5,540,000
38%
Plant and equipment, net
9,460,000
56.4%
9,020,000
62%
Total assets
16,790,000
100%
14,560,000
100%
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities
3,980,000
23.7%
2,920,000
20.1%
Note payable, 10%
3,640,000
21.7%
3,040,000
20.9%
Total liabilities
7,620,000
45.4%
5,960,000
41%
Stockholders' equity:
Common stock, $70 par value
7,000,000
41.7%
7,000,000
48%
Retained earnings
2,170,000
12.9%
1,600,000
11%
Total stockholders' equity
9,170,000
54.6%
8,600,000
59%
Total liabilities and stockholders' equity
16,790,000
100%
14,560,000
100%
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.