Problem 13-16A Common-Size Financial Statements [LO13-1] 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 Lydex Company Comparative Balance Sheet This Year Last Year Assets Current assets: $890,000 $ 1,020,000 300,000 1,520,000 2,300,000 180,000 Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses 0 2,420,000 3,530,000 240,000 5,320,000 8,980,000 Total current assets Plant and equipment, net 7,080,000 9,380,000 $16,460,000 $14,300,000 Total assets Liabilities and Stockholders' Equity Liabilities $ 3,960,000$ 2,860,000 3,020,000 Current liabilities Note payable, 10% 3,620,000 7,580,000 Total liabilities 5,880,000 Stockholders' equity: Common stock, $70 par value Retained earnings 7,000,000 1,880,000 7,000,000 1,420,000 8,420,000 $16,460,000 $14,300,000 Total stockholders' equity 8,880,000 Total liabilities and stockholders' equity Lydex Company Comparative Income Statement and Reconciliation Last Year This Year $15,790,000$ 12,880,000 9,660,000 Sales (all on account) Cost of goods sold 12,632,000 3,158,000 1,638,857 Gross margin Selling and administrative expenses 3,220,000 1,576,000 1,644,000 302,000 Net operating income Interest expense 1,519,143 362,000 1,342,000 402,600 Net income before taxes Income taxes (30%) 1,157,143 347,143 810,000 350,000 939,400 469,700 Net income Common dividends 460,000 1,420,000 Net income retained Beginning retained earnings 469,700 950,300 $ 1,880,000 $ 1,420,000 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 Acid-test ratio Average collection period Average sale period Return on assets Debt-to-equity ratio Times interest earned ratio Price-earnings ratic 2.3 40 days 60 days 8.5 % 0.69 5.8 10 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 100.01% Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses 100.0 Total current assets Plant and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: 100.0 % Current liabilities 0 Note payable, 10% otal liabilities Stockholders' equity: Common stock, $70 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