Problem 15-15 Comprehensive Ratio Analysis [LO15-2, LO15-3, LO15-4, LO15-5, LO15
ID: 2498852 • Letter: P
Question
Problem 15-15 Comprehensive Ratio Analysis [LO15-2, LO15-3, LO15-4, LO15-5, LO15-6]
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.)
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
a) Working Capital = Current Asset - Current Liabilities
This Year = 7,890,000 - 4,070,000 = 3,820,000
Last Year = 5,910,000 - 3,100,000 = 2,810,000
b) Current Ratio = Current asset - Current Liabilities
This Year = 7,890,000/4,070,000 = 1.94 : 1
Last Year = 5,910,000 / 3,100,000 = 1.91 :1
c) Acid Test Ratio = Liquid asset / Current Liabilities
This Year = 3,960,000 / 4,070,000 = 0.97 : 1
Last Year = 3,600,000/ 3,100,000 = 1.16 : 1
Liquid asset = Current Asset - Inventory -prepaid expenses
d) The Avg Sale period = 365 /(Credit Sales / Avg account receivable)
This Year = 15,920,000 / ((2,040,000+2,940,000)/2) = 365/6.39 = 57 Days
Last Year = 14,180,000 / ((20,40,000 +1,730,000)/2) = 365/7.52 = 49 Days
Rest part ask sepeartely