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:

       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 $96 per share and that at the end of last year it was $64. 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

1)

Earning per share = Net Income / Average outstnding shares

Average outstanding shares = 1,000,000.

Net Income = 1,190,000

Earning per share = $1,190,000/1,000,000 shares = $1.19 per share.

2)

Dividend Yield ratio

Dividend per share = $400,000/1000000 = $0.40.

Dividend yield ratio = Dividend per share / Market price per share = $0.40/$96 = 0.004167 or 0.4167%.

3)

Dividend payout ratio = Dividend / Net Income = $400,000/1,190,000 = 0.3361 or 33.61%.

4)

Price Earnings ratio = Market price / Earnings per share = $96 / $1.19 = 80.67227

5)Book value per share = Total share holders Equity / Outstanidng shares

= 9,420,000/1,000,000 = $9.42 per share.

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