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: Assets Carrent assets Cash Marketable securities Accounts receivable, but Inventory Prepaid expens Total current assets Plant and equipment, net Total assets Lydex Company Comparative Balance Sheet This Your Last Year 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' equity Lydex Company $1,000,000 3,860,000 1,240,000 300,000 3,540,000 270,000 1,960,000 2,400,000 210,000 7,770,000 9,500,000 17,370,000 5,110,000 3,090,000 #15,200,000 4,050,000 3,700,000 7,750,000 7,500,000 2,120,000 9,620,000 17,370,000 Comparative Income Statement and Reconciliation Sales (all on account) Cost of goods sold Gross margin Gelling and administrative expenses Set operating incone Interest expense Met incone before taxes Income taxe Net income (309) Common dividende Met income retained Beginning retained earnings Ending retained earnings $ 3,060,000 3,100,000 4,160,000 7,500,000 3,540,000 9,040,000 $ 15,200,000 13,720,000 This Year Last That 15,900,000 13,980,000 10,495,000 3.495,000 1,630,000 3,100,000 1,410,000 1,730,000 370,000 1,875,000 210,000 1,565,000 1,400,000 420.000 580,000 469,500 1,095,500 400,000 547,750 580,000 547,750 3,540,000 2,120,000 $92,250 1,540,000 To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry Current ratio 2.3 Acid-test ratio Average collection period 32 days Average sale period 60 days 9.76 Debt-to-equity ratio 0.T Times interest sareed ratio Price-earnings ratio S.T 10 Required: 1. You decide first to assess the company's performance in terms of debt management and profitability Compute the following for bath this year and last year (Round your "Percentage" answers to 1 decimal place and other answers to 2 decimal places.) 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 $13,110,000) e. The return on equity (Stockholders' equity at the beginning of last year totaled $8,492,250 There has been no change in comman stock over the last two years) Eis the company's financial leverage positive or negative