Required information [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 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% Total liabilities Stockholders' equity: Common stock, $70 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 970,000 0 2,740,000 3,610,000 260,000 7,580,000 9,540,000 $ 17,120,000 $ 1,210,000 300,000 1,840,000 2,100,000 200,000 5,650,000 9,060,000 $ 14,710,000 $ 4,020,000 3,680,000 7,700,000 $ 3,000,000 3,080,000 6,080,000 7,000,000 2,420,000 9,420,000 $ 17,120,000 7,000,000 1,630,000 8,630,000 $ 14,710,000 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 Income taxes (30%) Net income Common dividends Net income retained Beginning retained earnings Ending retained earnings This Year $ 15,870,000 12,696,000 3,174,000 1,106,000 2,068,000 Last Year $ 13,680,000 10,260,000 3,420,000 1,608,000 1,812,000 308,000 368,000 1,700,000 510,000 1,190,000 400,000 790,000 1,630,000 $ 2,420,000 1,504,000 451,200 1,052,800 526,400 526,400 1,103,600 $ 1,630,000 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 2.4 1.1 Average collection period 40 days Average sale period 60 days Return on assets 9.4% Debt-to-equity ratio 0.7 Times interest earned ratio 5.7 Price-earnings ratio 10 places.) a. Working capital b. The current ratio c. The acid-test ratio d. The average collection period e. The average sale period f. The operating cycle g. The total asset turnover This Year 3,560,000 1.89 Last Year 2,650,000 1.88 0.92 1.11 days days days days days days