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 $ 920, $ 1,160,000 Marketable securities 300,000 Accounts receivable, net 2,540,000 1,640,000 Inventory 3,560,000 2,100,000 Prepaid expenses 250,000 190,000 Total current assets 7,270,000 5,390,000 Plant and equipment, net 9,440, een 9,610,000 Total assets $16,710, ese $14,400,cea Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 3,970,00 $ 0.000 Note payable, 10 3,640,000 3,040,000 Total liabilities 7,610,000 5,940,000 Stockholders' equity! Common stock, $75 par value 7.500, cea 7,500,000 Retained earnings 1,600,000 960,000 Total stockholders' equity 9,100,000 8,460, eee Total liabilities and stockholders' equity $16,710,000 $14,400,000 Lydex Company Comparative Income Statement and Reconciliation This Year Last Year Sales (all on account) $ 15,020,000 $13,180,000 Cost of goods sold 12,656,000 9,885,000 Gross margin 3, 164,000 3,295,000 Selling and administrative expenses 1,400,000 Lydex Company Comparative Income Statement and Reconciliation This Year Last Year Sales (all on account) $ 15,820,000 $13,180,000 Cost of goods sold 12,656,000 9,885,000 Gross margin 3,164,000 3,295,000 Selling and administrative expenses 1,400,000 1,588, een Net operating income 1,764,000 1,707,000 Interest expense 364,000 304,000 Net income before taxes 1,400,000 1,483, eee Income taxes (30) 420,00 429,900 Net income 980,000 982,100 Common dividends 340, eee 491,050 Net income retained 640,000 491,050 Beginning retained earnings 960, eee 468,950 Ending retained earnings $ 1,600,000 $ 960,000 es To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry: 2.3 Current ratio Acid-test ratio Average collection period Average sale period Return on assets Debt-to-equity ratio Tines interest earned ratio Price-earnings ratio 1.1 40 days 60 days 8.89 0.7 5.8 10 Problem 15-15 Part 3 3. You decide, finally, to assess the company's liquidity and asset management. For both this year and last year, compute: a. Working capital b. The current ratio. (Round your final answers to 2 decimal places.) c. The acid-test ratio (Round your final answers to 2 decimal places.) d. The average collection period. (The accounts receivable at the beginning of last year totaled $1,630,000.) (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal place.) e. The average sale period. (The inventory at the beginning of last year totaled $1,990,000) (Use 365 days in a year. Round your Intermediate calculations and final answer to 2 decimal place.) f. The operating cycle. (Round your intermediate calculations and final answer to 2 decimal place.) 9. The total asset turnover. (The total assets at the beginning of last year totaled $13,030,000.) (Round your final answers to 2 decimal places.) ces This Year Last Year a. Working capital b. The current ratio c. The acid-test ratio d. The average collection period e. The average sale period The operating cycle 9. The total asset turnover days days days days days days