You have just been hired as a financial analyst for Lydex Company, a manufacture

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 Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses $ 890,000 $ 1,130,000 300,000 1,520,000 2,300,000 180,000 0 2,420,000 3,530,000 240,000 7,080,000 9,380,000 5,430,000 8,980,000 Total current assets Plant and equipment, net Total assets $16,460,000 $ 14,410,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 10% $ 3,940,000 3,620,000 2,840,000 3,020,000 Total liabilities 7,560,000 5,860,000 Stockholders' equity: Common stock, $70 par value Retained earnings 7,000,000 1,900,000 7,000,000 1,550,000 Total stockholders' equity 8,900,000 8,550,000 Total liabilities and stockholders' equity $16,460,000 $ 14,410,000

Explanation / Answer

2.

3.

This year Last year a. Earnings per share $ 7.00 $ 9.394 b. Dividend yield ratio 0.044 0.098 c. Dividend payout ratio 50% 50% d. Price earnings ratio 11.43 5.11 e. Book value per share of common stock $ 89 $ 85.50

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