Problem 15-16 Common-Size Financial Statements [LO15-1] 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: Cash $ 1,040,000 $ 1,280,000 Marketable securities 300,000 Accounts receivable, net 3,020,000 2,120,000 Inventory 3,680,000 2,300,000 Prepaid expenses 270,000 210,000 Total current assets 8,010,000 6,210,000 Plant and equipment, net 9,680,000 9, 130,000 Total assets $ 17,690,000 $ 15,340,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 4,090,000 $ 3,140,000 Note payable, 10% 3,720,000 3,120,000 Total liabilities 7,810,000 6,260,000 Stockholders' equity: Common stock, $75 par value 7,500,000 7,500,000 Retained earnings 2,380,000 1,580,000 Total stockholders' equity 9,880,000 9,080,000 Total liabilities and stockholders' equity $ 17,690,000 $ 15,340,000 Lydex Company Comparative Income Statement and Reconciliation This Year Sales (all on account) $ 15,940,000 Cost of goods sold 12,752,000 Gross margin 3,188,000 Selling and administrative expenses 1,216,000 Net operating income 1,972,000 Interest expense 372,000 Net income before taxes 1,600,000 Income taxes (30%) 480,000 Net income 1,120,000 Common dividends 320,000 Net income retained 800,000 Beginning retained earnings 1,580,000 Ending retained earnings $ 2,380,000 Last Year $ 14,380,000 10,785,000 3,595,000 1,636,000 1,959,000 312,000 1,647,000 494,100 1,152,900 576,450 576,450 1,003,550 $ 1,580,000 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 Times interest earned ratio Price-earnings ratio 2.3 1.2 32 days 60 days 8.6% 0.69 5.8 10 Required: 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 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, S75 par value Retained earnings Total stockholders' equity Total liabilities and equity % % % 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.) 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 % %