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Lydex 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 $ $1,050,000$ $ $1,290,000$

Marketable securities $0300,000$

Accounts receivable, net $3,060,0002,160,000$

Inventory $3,400,0002,400,000$

Prepaid expenses $240,000220,000$

Total current assets $7,750,0006,370,000$

Plant and equipment, net $9,700,0009,140,000$

Total assets $ $17,450,000$ $ $15,510,000$

Liabilities and Stockholders' Equity

Liabilities:

Current liabilities $ $4,400,000$ $ $3,160,000$

Note payable, $10\%3,720,0003,120,000$

Total liabilities $8,120,0006,280,000$

Stockholders' equity:

Common stock, $$70$ par value $7,000,0007,000,000$

Retained earnings $2,330,0002,230,000$

Total stockholders' equity $9,330,0009,230,000$

Total liabilities and stockholders' equity $ $17,450,000$ $ $15,510,000$

Lydex Company

Comparative Income Statement and Reconciliation

This Year Last Year

Sales $($all on account$)$ $ $15,950,000$ $ $14,480,000$

Cost of goods sold $12,760,00010,860,000$

Gross margin $3,190,0003,620,000$

Selling and administrative expenses $1,918,0001,640,000$

Net operating income $1,272,0001,980,000$

Interest expense $372,000312,000$

Net income before taxes $900,0001,668,000$

Income taxes $(30\%)270,000500,400$

Net income $630,0001,167,600$

Common dividends $530,000583,800$

Net income retained $100,000583,800$

Beginning retained earnings $2,230,0001,646,200$

Ending retained earnings $ $2,330,000$ $ $2,230,000$

The following financial data and ratios are typical of companies in Lydex Company$$s industry:

Current ratio $2\mathrm{.}3$

Acid$-$test ratio $1\mathrm{.}2$

Average collection period $32$ days

Average sale period $60$ days

Return on assets $8\mathrm{.}7\%$

Debt$-$to$-$equity ratio $0\mathrm{.}7$

Times interest earned ratio $5\mathrm{.}9$

Price$-$earnings ratio $10$

Required:

$1.$ To assess the company$$s performance in terms of debt management and profitability, compute the following for this year and last year:

Note: Round your "Percentage" answers to $1$ decimal place and other answers to $2$ decimal places.

The times interest earned ratio.

The debt$-$to$-$equity ratio.

The gross margin percentage.

The return on total assets. $($Total assets at the beginning of last year were $$13,160,000.)$

The return on equity. $($Stockholders$$ equity at the beginning of last year totaled $$8,646,200.$ There has been no change in common stock over the last two years.$)$

Is the company$$s financial leverage positive or negative?