Problem 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: Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets Lydex Company Comparative Balance Sheet This Year Last Year $ 845,000. $ 1,200,000 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 stockholders' equity Lydex Company 2,700,000 3,600,000 260,000 7,405,000 9,520,000 $ 16,925,000 300,000 1,800,000 2,000,000 200,000 5,500,000 9,050,000 $ 14,550,000 $ 4,010,000 3,660,000 7,670,000 $ 2,600,000 3,060,000 5,660,000 7,500,000 7,500,000 1,755,000 9,255,000 1,390,000 8,890,000 $ 16,925,000 $ 14,550,000 Comparative Income Statement and Reconciliation Sales (all on account) Cost of goods sold: Gross margin This Year $ 15,860,000 12,688,000 3,172,000 Last Year $ 13,580,000 10,185,000 3,395,000 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 1,713,143 1,604,000 1,458,857 1,791,000 366,000 306,000 1,092,857 1,485,000 327,857 445,500 765,000 1,039,500 400,000 519,750 365,000 519,750 1,390,000 870,250 $ 1,390,000 $ 1,755,000 To begin your assignment vou gather the following financial data and ratios that are typical of companies in Lvdex Company's industry. Ending retained earnings $ 1,755,000 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 Average sale period Return on assets Debt-to-equity ratio Tines interest earned ratio Price-earnings ratio. Required: 2.4 1.2 40 days 60 days 9.3% 0.66 5.9 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 balance sheet in common-size format. (Round your answers to 1 decimal place. Due to rounding, figures may not fully reconcile down a column.) Lydex Company Common-Size Balance Sheets 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 This Year Last Year % % % % 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 This Year Last Year % % % + % % % Retained earnings Total stockholders' equity Total liabilities and equity % % Average collection period Average sale period Return on assets Debt-to-equity ratio Times interest earned ratio Price-earnings ratio Required: 1.2 40 days 60 days 9.3% 0.66 5.9 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 % < Required 1 % Required 2