You have just been hired as a financial analyst for Lydex Company, a manufacture
ID: 2498140 • 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, finally, to assess the company’s liquidity and asset management. For both this year and last year, compute: (Use 365 days in a year. Round your intermediate calculations and final answer 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
Current year
a.
Working capital= current assets-current liabilities
=7890000-4070000= $3820000
b. current ratio= current assets/current liabilities= 7890000/4070000=1.939
c. Acid test ratio = (CAsh+cash equivalents)/Current liabilities
=3960000/4070000=0.973
Last year
a.
Working capital= current assets-current liabilities
=5910000-3100000= $2810000
b. current ratio= current assets/current liabilities= 5910000/3100000=1.906
c. Acid test ratio = (CAsh+cash equivalents)/Current liabilities
=1800000/3100000=0.581
Working capital= current assets-current liabilities
=7890000-4070000= $3820000
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