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Last Year Comparative Balance Sheet This Year Assets Current assets: Cash $ 910,000 Marketable securities 0 Accounts receivable, net 2,500,000 Inventory 3,550,000 Prepaid expenses 250,000 Total current assets 7,210,000 Plant and equipment, net 9,420,000 Total assets $16,630,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 3,960,000 Note payable, 10% 3,640,000 Total liabilities 7,600,000 Stockholders' equity: Common stock, $70 par value 7,000,000 Retained earnings 2,030,000 Total stockholders' equity 9,030,000 Total liabilities and stockholders' equity $16,630,000 $ 1,150,000 300,000 1,600,000 2,000,000 190,000 5,240,000 9,000,000 $14,240,000 $ 2,880,000 3,040,000 5,920,000 7,000,000 1,320,000 8,320,000 $14,240,000 Lydex Company Comparative Income Statement and Reconciliation This Year Last Year Sales (all on account) $ 15,810,000 $13,080,000 Cost of goods sold 12,648,000 9,810,000 Gross margin 3, 162,000 3,270,000 Selling and administrative expenses 1,298,000 1,584,000 Net operating income 1,864,000 1,686,000 Interest expense 364,000 304,000 Net income before taxes 1,500,000 1,382,000 Income taxes (30%) 450,000 414,600 Net income 1,050,000 967,400 Common dividends 340,000 483,700 Net income retained 710,000 483,700 Beginning retained earnings 1,320,000 836,300 Ending retained earnings $ 2,030,000 $ 1,320,000 Current ratio Acid-test ratio Average collection period Average sale period Return on assets Debt-to-equity ratio Times interest earned ratio Price-earnings ratio 2.3 1.0 40 days 60 days 8.7% 0.7 5.7 10 Required: 1. You decide first to assess the company's performance in terms of debt management and profitability. Compute the followin for both this year and last year: (Round your "Percentage" answers to 1 decimal place and other answers to 2 decimal places.) a. The times interest earned ratio. b. The debt-to-equity ratio. c. The gross margin percentage. d. The return on total assets. (Total assets at the beginning of last year were $13,020,000.) e. The return on equity. (Stockholders' equity at the beginning of last year totaled $7,836,300. There has been no change in common stock over the last two years.) f. Is the company's financial leverage positive or negative? This Year Last Year a. The times interest earned ratio b. The debt-to-equity ratio c. The gross margin percentage d. The return on total assets e. The return on equity 1. Is the company's financial leverage positive or negativo? % % % % % %