Required information Problem 16-15 (Algo) Comprehensive Ratio Analysis [LO16-2, LO16-3, LO16-4, LO16-5, LO16-6) [The following information applies to the questions displayed below] 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 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 stockholders' This Year Last Year $1,000,000 $1,240,000 300,000 2,860,000 1,960,000 3,640,000 2,400,000 270,000 210,000 7,770,000 6,110,000 9,600,000 9,090,000 17,370,000 15,200,000 $ $ $ 4,050,000 $ 3,060,000 3,700,000 3,100,000 7,750,000 6,160,000 7,500,000 7,500,000 2,120,000 1,540,000 9,620,000 9,040,000 $ $ equity Lydex Company 17,370,000 15,200,000 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 Last Year $ 15,900,000 $ 13,980,000 12,720,000 10,485,000 3,180,000 3,495,000 1,410,000 1,620,000 1,770,000 1,875,000 370,000 310,000 1,400,000 1,565,000 420,000 469,500 980,000 1,095,500 400,000 547,750 580,000 547,750 1,540,000 992,250 $1,540,000 $ 2,120,000 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 2.3 1.1 Average collection period 32 days Average sale period 60 days Return on assets 9.7 % Debt-to-equity ratio 0.7 Times interest earned 5.7 ratio Price-earnings ratio 18