2 Problem 15-16 Common-Size Financial Statements [LO15-1] 12.5 points 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: Skipped Lydex Company Comparative Balance Sheet This Year eBook Last Year Print $ 950,000 References 2,500,000 3,550,000 250,000 7,250,000 9,420,000 $ 16,670,000 $ 1,110,000 300,000 1,600,000 2,000,000 190,000 5,200,000 9,000,000 $ 14,200,000 Assets Current assets: Cash 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, $70 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 3,960,000 3,640,000 7,600,000 $ 2,880,000 3,040,000 5,920,000 7,000,000 2,070,000 9,070,000 $ 16,670,000 7,000,000 1,280,000 8,280,000 $ 14,200,000 2 12.5 points 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 1,183,714 1,584,000 Net operating income 1,978, 286 1,686,000 Interest expense 364,000 304,000 Net income before taxes 1,614,286 1,382,000 Income taxes (30%) 484, 286 414,600 Net income 1,130,000 967,400 Common dividends 340,000 483,700 Net income retained 790,000 483,700 Beginning retained earnings 1,280,000 796,300 Ending retained earnings $ 2,070,000 $ 1, 280,000 Skipped eBook Print References To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry: 2.3 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 1.2 40 days 60 days 8.7% 0.66 5.7 10 Required: 1. Present the balance sheet in common-size format. 2. Present the income statement in common-size format down through net income 2 Tunny Tecnicie uuwii a Colull.) Lydex Company Common-Size Balance Sheets This Year Last Year 12.5 points Assets Current assets: Skipped Cash % % Marketable securities eBook Accounts receivable, net Print References 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, $70 par value Retained earnings Total stockholders' equity Total liabilities and equity % % 2 Required: 1. Present the balance sheet in common-size format. 2. Present the income statement in common-size format down through net income. 12.5 points Complete this question by entering your answers in the tabs below. Skipped Required 1 Required 2 eBook 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.) Print References Lydex Company Common-Size Income Statements This Year Last Year Sales % % Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income % %