7. value: 4.50 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: Lydex Company Comparative Balance Sheet This Year Last Year Assets Current assets: Cash Marketable securities $ 1,200,000 300,000 845,000 Accounts receivable, 1,800,000 2,700,000 net Inventory Prepaid expenses 3,600,000 260,000 2,000,000 200,000 5,500,000 9,050,000 Total current assets 7,405,000 9,520,000 Plant and equipment, net $ 16,925,000 Total assets $14,550,000 Liabilities and Stockholders' Equity Liabilities: $ 4,010,000 3,660,000 $ 2,600,000 3,060,000 Current liabilities Note payable, 10% 7,670,000 Total liabilities 5,660,000 Stockholders' equity: Common stock, $75 par value Retained earnings 7,500,000 7,500,000 1,755,000 1,390,000 Total stockholders' equity 8,890,000 9,255,000 Total liabilities and $ 16,925,000 $ 14,550,000 stockholders' equity Lydex Company Comparative Income Statement and Reconciliation This Year 15,860,000 Last Year 13,580,000 Sales (all on account) 10,185,000 12,688,000 Cost of goods sold Gross margin Selling and administrative 3,172,000 3,395,000 1,713,143 1,604,000 expenses Net operating income Interest expense 1,458,857 366,000 1,791,000 306,000 Net income before taxes 1,092,857 327,857 1,485,000 445,500 Income taxes (30%) Net income 765,000 400,000 1,039,500 519,750 Common dividends Net income retained Beginning retained earnings 365,000 519,750 1,390,000 870,250 $1,755,000 $1,390,000 Ending retained earnings To begin your assigment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry: Current ratio 2.4 Acid-test ratio 1.2 Average collection period days 40 days Average sale period 60 Return on assets 9.3 Debt-to-equity ratio Times interest earned ratio Price-earnings ratio 0.66 5.9 10 Required: 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.) Lydex Company Common-Size Balance Sheets This Year Last Year 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, $75 par value Retained earnings Total stockholders' equity Total liabilities and equity 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.) 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