Required information [The following information applies to the questions displayed below.] 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 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% $930,000 0 2,580,000 3,570,000 250,000 7,330,000 9,460,000 $ 16,790,000 $ 1,170,000 300,000 1,680,000 2,200,000 190,000 5,540,000 9,020,000 $ 14,560,000 Total liabilities Stockholders' equity: Common stock, $70 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Lydex Company $ 3,980,000 3,640,000 7,620,000 7,000,000 2,170,000 9,170,000 $ 16,790,000 $ 2,920,000 3,040,000 5,960,000 7,000,000 1,600,000 8,600,000 $ 14,560,000 Sales (all on account) Cost of goods sold Gross margin Comparative Income Statement and Reconciliation This Year $ 15,830,000 12,664,000 3,166,000 1,402,000 Last Year $ 13,280,000 9,960,000 3,320,000 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 1,592,000 1,764,000 1,728,000 364,000 304,000 1,400,000 1,424,000 420,000 427,200 980,000 996,800 410,000 498,400 498,400 1,101,600 570,000 1,600,000 $ 2,170,000 $ 1,600,000 The following financial data and ratios are typical of companies in Lydex Company's industry: Current ratio Acid-test ratio Average sale period. Average collection period Return on assets 2.3 1.1 40 days 60 days 8.9% Debt-to-equity ratio 0.7 Times interest earned ratio Price-earnings ratio 5.9 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. a. The times interest earned ratio. b. The debt-to-equity ratio. c. The gross margin percentage. d. The return on total assets. (Total assets at the beginning of last year were $13,040,000.) e. The return on equity. (Stockholders' equity at the beginning of last year totaled $8,101,600. There has been no change in common stock over the last two years.) f. Is the company's financial leverage positive or negative? a. The times interest earned ratio b. The debt-to-equity ratio This Year Last Year c. The gross margin percentage % % d. The return on total assets e. The return on equity % % % % f. Is the company's financial leverage positive or negative? 2. To assess the company's stock market performance, compute the following for this year and last year. Assume Lydex's stock price at the end of this year and last year was $88 and $56, respectively. Note: Round your "Percentage" answers to 1 decimal place and other intermediate and final answers to 2 decimal places. a. The earnings per share. b. The dividend yield ratio. c. The dividend payout ratio. d. The price-earnings ratio. e. The book value per share of common stock. a. The earnings per share b. The dividend yield ratio c. The dividend payout ratio d. The price-earnings ratio e. The book value per share of common stock This Year % % Last Year % % 3. To assess the company's liquidity and asset management, compute the following for this year and last year: a. Working capital. b. The current ratio. Note: Round your final answers to 2 decimal places. c. The acid-test ratio. Note: Round your final answers to 2 decimal places. d. The average collection period. (The accounts receivable at the beginning of last year totaled $1,640,000.) Note: Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place. e. The average sale period. (The inventory at the beginning of last year totaled $2,000,000.) Note: Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place. f. The operating cycle. Note: Round your intermediate calculations and final answers to 2 decimal place. g. The total asset turnover. (The total assets at the beginning of last year totaled $13,040,000.) Note: Round your final answers to 2 decimal places. a. Working capital This Year Last Year b. The current ratio c. The acid-test ratio d. The average collection period days days e. The average sale period days days f. The operating cycle days days g. The total asset turnover