[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, $ 78 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Lydex Company $ 960,000 2,700,000 $ 1,260,000 300,000 1,800,000 2,400,000 3,900,000 240,000 180,000 7,800,000 5,940,000 9,300,000 $ 17,100,000 8,940,000 $14,880,000 5,760,000 $ 3,900,000 3,600,000 7,500,000 7,800,000 1,800,000 $ 2,760,000 3,000,000 9,600,000 $ 17,100,000 Comparative Income Statement and Reconciliation Sales (all on account) This Year $ 15,750,000 12,600,000 3,150,000 1,590,000 1,560,000 360,000 7,800,000 1,320,000 9,120,000 $ 14,880,000 Last Year $ 12,480,000 19,900,000 2,580,000 1,560,000 1,020,000 300,000 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 1,200,000 720,000 360,000 216,000 840,000 504,000 360,000 252,000 480,000 1,320,000 $ 1,800,000 252,000 1,068,000 $ 1,320,000