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 $106 per share and that at the end of last year it was $74. 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.)

This year and Last Year

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

2.

a. the earnings per share = net income/ no.of shares

this year =1260000/100000= 12.6, no.of shares = 7500000/75

last year = 1124900/100000= 11.249

b. the dividend yied ratio= dividend per share/ current market price

this year = dividend per share =320000/100000= 3.2

current market price= 106

   ratio dividend yield= 3.2/106 = 0.030

   last year = dividend per share = 562450/ 100000= 5.6245, market price = 74

   dividend yield ratio= 5.62450/ 74

= .076

c. Dividend payout ratio = DPS/ EPS

This year = 3.2/12.6 * 100 = 25.40%

Last Year= 5.6245/ 11.249 * 100= 50%

d. Price earning ratio= MPS / EPS [MARKET PRICE PER SHARE}

this year= 106/ 12.6=8.41

last year = 74/ 11.249= 6.58

e. book value per share of common stock = (common stock + retained earnings) / no. of shares

this year = 9760000/ 100000= 97.6

last year = 8820000/ 100000 =88.2

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