You have j ust been hired as a financial analyst for Lydex Company, a manufactur

Question

You have j ust 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:

Present the income statement in common-size format down through net income. (Round your percentage answers to 1 decimal place i.e., 0.123 is considered as 12.3. Due to rounding, figures may not fully reconcile down a column.)

You have j ust 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

This year Last year   Sales (all on account) 100.0% 100.0%   Cost of goods sold 80.0% 75.0%   Gross margin 20.0% 25.0%   Selling and administrative expenses 11.7% 12.2%   Net operating income 8.3% 12.8%   Interest expense 2.3% 2.3%   Net income before taxes 6.1% 10.5%   Income taxes (30%) 1.8% 3.2%   Net income 4.2% 7.4%

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