You have just been hired as a financial analyst for Lydex Company, a manufacture
ID: 2479992 • 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 decide next to assess the company’s stock market performance. Assume that Lydex’s stock price at the end of this year is $94 per share and that at the end of last year it was $62. For both this year and last year, compute: (Round your intermediate calculations and final percentage answers to 1 decimal place. i.e., 0.123 should be considered as 12.3%. Round the rest of the intermediate calculations and final answers to 2 decimal places.)
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:
Explanation / Answer
S.no Formula Last year This year
1 EPS = Net income / weighted average common shares = 1039500/100000 = 1260000/100000
= 10.4 = 12.6
2. DPS = dividends / no of shares = 519750 / 100000 = 400000 / 100000
= 5.2 = 4
3. Dividend yield ratio = DPS / MPS = 5.2 / 62 = 4/94
= 0.084 or 8.4% = 0.043 or 4.3%
4. Dividend payout = dividends / net income = 519750 / 1039500 = 400000 / 1260000
= 0.5 or 50% = 0.32 or 32%
5. Price earnings ratio = MPS /EPS = 62 / 10.4 = 94 / 12.6
= 5.96 = 7.46
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