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:Lydex CompanyComparative Balance SheetThis YearLast Year Assets Current assets:     Cash$820,000    $1,060,000         Marketable securities0    300,000         Accounts receivable, net2,860,000    1,960,000         Inventory3,640,000    2,400,000         Prepaid expenses270,000    210,000      Total current assets7,590,000    5,930,000      Plant and equipment, net9,600,000    9,090,000      Total assets$17,190,000    $15,020,000      Liabilities and Stockholders' Equity Liabilities:     Current liabilities$4,050,000    $3,060,000         Note payable, 10%3,700,000    3,100,000      Total liabilities7,750,000    6,160,000      Stockholders' equity:      Common stock, $75 par value7,500,000    7,500,000          Retained earnings1,940,000    1,360,000      Total stockholders' equity9,440,000    8,860,000      Total liabilities and stockholders' equity$17,190,000    $15,020,000    Lydex CompanyComparative Income Statement and ReconciliationThis YearLast Year Sales (all on account)$15,900,000   $13,980,000     Cost of goods sold12,720,000   10,485,000     Gross margin3,180,000   3,495,000     Selling and administrative expenses1,410,000   1,620,000     Net operating income1,770,000   1,875,000     Interest expense370,000   310,000     Net income before taxes1,400,000   1,565,000     Income taxes (30%)420,000   469,500     Net income980,000   1,095,500     Common dividends400,000   547,750     Net income retained580,000   547,750     Beginning retained earnings1,360,000   812,250     Ending retained earnings$1,940,000   $1,360,000          To begin your assigment you gather the following financial data and ratios that are typical of companies in Lydex Company’s industry: Current ratio2.3    Acid-test ratio1.2    Average collection period32 days       Average sale period60 days       Return on assets9.7 %            Debt-to-equity ratio0.65 Times interest earned ratio5.7 Price-earnings ratio10Required:1.Present the balance sheet in common-size format. (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.)2.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.)

Answer 1

A.) Common Size Statement:-Balance sheet

	Lydex Company
	Common size statement
	Balance Sheet
	Particulars	Current year	Last year	Diff	%
	Cash	820,000.00	1,060,000.00	(240,000.00)	(22.64)
	Marketable securities	-	3,000,000.00	(3,000,000.00)	(100.00)
	Accounts receivable	2,860,000.00	1,960,000.00	900,000.00	45.92
	Inventory	3,640,000.00	2,400,000.00	1,240,000.00	51.67
	Prepaid expenses	270,000.00	210,000.00	60,000.00	28.57
	Total Current assets	7,590,000.00	8,630,000.00	(1,040,000.00)	(12.05)
	Current Liablities	4,050,000.00	3,060,000.00	990,000.00	32.35
	10% Note payable	3700000	3100000	600,000.00	19.35
	Total Liabilities	7,750,000.00	6,160,000.00	1,590,000.00	25.81
	Stockholder Equity	9,440,000.00	8,860,000.00	580,000.00	6.55
	Total liablities and stock holder equity	17,190,000.00	15,020,000.00	2,170,000.00	14.45
	B.) Common size statement :- Profit /loss Statement ekkarill92 Next > < Previous Related Solutions You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety... 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: Lydex Company Comparative Balance Sheet This Year Last Year Assets Current assets: Cash $ 960,000 $ 1,260,000 Marketable securities 0 300,000 Accounts receivable, net 2,700,000 1,800,000 Inventory 3,900,000... You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety... You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety helmets. 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This program... how to conduct a marketing mix for 3d crest white strips ADVERTISEMENT About @ 2020 WizEdu Lydex Company Common size statement Profit/Loss Statement Particulars Current year Last year Diff % Sales    15,900,000.00    13,980,000.00      1,920,000.00             13.73 COGS    12,720,000.00    10,485,000.00      2,235,000.00             21.32 Gross Profit      3,180,000.00      3,495,000.00       (315,000.00)             (9.01) Selling and admin expenses      1,410,000.00      1,620,000.00 Net Operating income      1,770,000.00      1,875,000.00       (105,000.00)             (5.60) Interest          370,000.00          310,000.00            60,000.00             19.35 Net operating income before taxes      1,400,000.00      1,565,000.00       (165,000.00)           (10.54) Income taxes          420,000.00          469,500.00         (49,500.00)           (10.54) Net Income          980,000.00      1,095,500.00       (115,500.00)           (10.54) Dividend          400,000.00          547,750.00       (147,750.00)           (26.97) Net Income          580,000.00          547,750.00            32,250.00                5.89