Required information [The following information applies to the questions displayed below] You have just been hired as a financial analyst for Lydiex 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 This Year Last Year Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets $930,000 1,170,000 300,000 2,580,000 1,680,000 3,570,000 2,200,000 250,000 190,000 7,330,000 5,540,000 9,460,000 9,020,000 $ $ 16,790,000 14,560,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 10% 3,980,000 2,920,000 3,640,000 3,040,000 Total liabilities 7,620,000 5,960,000 Stockholders' equity: Common stock, $70 par value Retained earnings 7,000,000 7,000,000 2,178,000 1,600,000 Total stockholders' equity 9,170,000 8,600,000 Total liabilities and stockholders' equity $ $ 16,790,000 14,560,000 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 This Year Last Year $ $ 15,830,000 13,280,000 12,664,000 9,960,000 3,166,000 3,320,000 1,402,000 1,592,000 1,764,000 364,000 1,728,000 304,000 1,400,000 1,424,000 Income taxes (30%) 420,000 427,200 Net income 988,000 996,800 Common dividends 410,000 498,400 Net income retained 570,000 498,400 Beginning retained earnings 1,600,000 1,101,600 $ Ending retained earnings 2,170,000 1,600,000 To begin your assignment you gether 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 Average sale period 40 days 60 days Return on assets 8.9% Debt-to-equity ratio 0.7 Times interest earned 5.9 ratio Price-earnings ratio 10 Required: 1. You decide first to assess the company's performance in terms of debt management and profitability. Compute the following for both this year and last year: (Round your "Percentage" answers to 1 decimal place and other answers to 2 decimal places.)