To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Companys industry:

Current ratio	2.4
Acid-test ratio	1.2
Average collection period	40	days
Average sale period	60	days
Return on assets	9.1	%
Debt-to-equity ratio	0.69
Times interest earned ratio	5.7
Price-earnings ratio	10

Required:

1. Present the balance sheet in common-size format.

2. Present the income statement in common-size format down through net income.

Lydex Company
Common-Size Balance Sheets
	This Year		Last Year
Assets
Current assets:
Cash		%		%
Marketable securities
Accounts receivable, net
Inventory
Prepaid expenses
Total current assets	0.0		0.0
Plant and equipment, net
Total assets	0.0	%	0.0	%
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities		%		%
Note payable, 10%
Total liabilities	0.0		0.0
Stockholders equity:
Common stock, $75 par value
Retained earnings
Total stockholders equity	0.0		0.0
Total liabilities and equity	0.0	%	0.0	%

Lydex Company Comparative Balance Sheet This Year Last Year Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses $ 940,000 1,200,000 300,000 1,720,000 2,300,000 190,000 5,710,000 9,030,000 $16,870,000 $14,740,000 2,620,000 3,580,000 250,000 7,390,000 9,480,000 Total current assets Plant and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 10% $ 3,880,000 2,940,000 3,060,000 6,000,000 3,660,000 7,540,000 Total liabilities Stockholders' equity: 7,500,000 1,240,000 8,740,000 $16,870,000 $14,740,000 Common stock, $75 par value Retained earnings 7,500,000 1,830,000 9,330,000 Total stockholders' equity Total liabilities and stockholders' equity Lydex Company Comparative Income Statement and Reconciliation This Year Last Year 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 15, 840,000 $ 13,380,000 10,035,000 3,345, 000 1,596,000 1,749,000 306,000 1,443,000 432,900 1,010,100 505, 050 505, 050 734,950 $ 1,830,000 $1,240,000 12,672,000 3,168,000 1,473,429 1,694,571 366,000 1,328,571 398,571 930,000 340,000 590,000 1,240,000 To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry