Problem 16-16 (Algo) Common-Size Financial Statements [LO16-1] 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 Lydex Company Comparative Balance Sheet This Year Last Year $ 900,000 0 2,460,000 3,540,000 $ 1,030,000 300,000 1,560,000 2,400,000 190,000 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 stockholders' equity Lydex Company 250,000 7,150,000 9,400,000 5,480,000 8,998,000 $ 16,550,000 $ 14,470,000 $ 3,950,000 $ 2,860,000 3,620,000 7,570,000 7,500,000 1,480,000 8,980,000 3,020,000 5,880,000 7,500,000 1,090,000 8,590,000 $ 16,550,000 $ 14,470,000 Comparative Income Statement and Reconciliation Sales (all on account) Cost of goods sold Gross margin This Year $ 15,800,000 12,640,000 3,160,000 Last Year $ 12,980,000 9,735,000 3,245,000 Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income Common dividende 1,840,857 1,580,000 1,319,143 1,665,000 362,000 302,000 957,143 287,143 670,000 RD DRA 954,100 477 asa 1,363,000 408,900 Lydex Company Comparative Income Statement and Reconciliation Sales (all on account) Cost of goods sold, Gross margin 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 This Year $ 15,800,000 $12,980,000 Last Year 12,640,000 9,735,000 3,160,000 3,245,000 1,840,857 1,580,000 1,319,143 1,665,000 362,000 302,000 957,143 1,363,000 287,143 408,900 670,000 954,100 280,000 477,050 390,000 477,050 612,950 1,090,000 $ 1,480,000 $ 1,090,000 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: 2.3 1.2 40 days 60 days 8.6% 0.65 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.) 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 This Year Last Year % Total current assets 0.0 0.0 Plant and equipment, net Total assets 0.0% 0.0% Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 10% 00 % % 00 Total liabilities Stockholders' equity Common stock, $75 par value Retained earnings Total stockholders' equity 0.0 00% Total liabilities and equity 0.0 0.0 % Required 2 > 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 5:43 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.) ces Sales Cost of goods sold Gross margin Lydex Company Common-Size Income Statements This Year Last Year Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income %