14-16 (Algo) Common-Size Financial Statements [LO14-1] 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: Assots Current assets: Cash Lydex Company Comparative Balance Sheet This Year Last Year Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities $980,000 $1,140,000 0 300,000 2,780,000 3,620,000 260,000 7,640,000 9,560,000 $ 17,200,000 1,880,000 2,200,000 200,000 5,720,000 9,070,000 $ 14,790,000 Note payable, 10 Total liabilities Stockholders' equity $4,030,000 3,680,000 $2,780,000 3,080,000 7,710,000 5,860,000 Common stock, $75 par value 7,500,000 7,500,000 Retained earnings 1,990,000 1,430,000 Total stockholders' equity 9,490,000 8,930,000 Total liabilities and stockholders' equity $ 17,200,000 $14,790,000 Lydex Company Comparative Income Statement and Reconciliation This Year $ 15,800,000 Last Year Sales (all on account) Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30) $13,780,000 12,704,000 10,335,000 3,176,000 3,445.000 1,456,571 1,612,000 1,739,429 1,833,000 368,000 308,000 1,371,429 411,429 1,525,000 457,500 Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 108 Total liabilities Stockholders equity: Common stock, $75 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 4,030,000 $2,780,000 3,680,000 3,080,000 7,710,000 5,860,000 7,500,000 7,500,000 1,990,000 1,430,000 9,490,000 8,930,000 $ 17,200,000 $ 14,790,000 Lydex Company Comparative Income Statement and Reconciliation Sales (all on account) Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income Common dividends Net income retained Beginning retained earnings Ending retained earnings This Year $ 15,880,000 12,704,000 3,176,000 1,436,571 Last Year $ 13,780,000 10,335,000 3,445,000 1,612,000 1,739,429 1,833,000 368,000 308,000 1,371,429 1,525,000 411,429 457,500 960,000 1,067,500 400,000 533,750 560,000 533,750 1,430,000 896,250 $ 1,990,000 $ 1,430,000 To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry: Current ratio Acid-test ratio Average collection period 2.4 1.2 32 days Average sale period 60 days Return on assets 9.5 Debt-to-equity ratio 0.68 Tines interest earned ratio 5.8 Price-earnings ratio 10 Required: 1. Present the balance sheet in common-size format. 2. Present the income statement in common-size format down through net income. 1. Present the balance sheet in common-size format. 2. Present the income statement in common-size format down through net income. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Present the balance sheet in common-size format. (Round your answers to 1 decimal place. Due to rounding, figures may not fully reconcile down a column.) Assets Current assets: Cash Lydex Company Common-Size Balance Sheets Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 10% Total liabilities Stockholders' equity Common stock, $75 par value Retained eamings Total stockholders' equity Total liabilities and equity This Year Last Year 0.0 0.0 0.0 % 0.0 % % 195 0.0 0.0 % 0.0 0.0 0.0 % 0.0 % Times interest earned ratio Price-earnings ratio Required: 5.8 10 1. Present the balance sheet in common-size format. 2. Present the income statement in common-size format down through net income. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Present the income statement in common-size format down through net income. (Round your answers to 1 decimal place. Due to rounding, figures may not fully reconcile down a column.) Sales Cost of goods sold Lydex Company Common-Size Income Statements Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income This Year Last Year % %