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 Lydex Company Comparative Balance Sheet This Year! Last Year 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, $75 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $980,000 2,780,000 3,620,000 260,000 7,640,000 9,560,000 $ 1,140,000 300,000 1,880,000 2,200,000 200,000 5,720,000 9,070,000 $ 17,200,000 $ 14,790,000 $ 4,030,000 $2,780,000 3,680,000 3,080,000 7,710,000 5,860,000 7,500,000 7,500,000 1,990,000 1,430,000 9,490,000 8,930,000 $ 17,200,000 $ 14,790,000 Lydex Company Comparative Income Statement and Reconciliation Sales (all on account) Cost of goods sold This Year $ 15,880,000 12,704,000 3,176,000 Last Year $ 13,780,000 10,335,000 3,445,000 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 1,525,000 1,436,571 1,612,000 1,739,429 1,833,000 368,000 308,000 1,371,429 411,429 457,500 960,000 1,067,500 400,000 533,750 560,000 1,430,000 533,750 896,250 $ 1,990,000 $ 1,430,000 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 Average collection period Average sale period Return on assets Debt-to-equity ratio, 2.4 1.2 32 days 60 days 9.5% Times interest earned ratio Price-earnings ratio Required: 0.68 5.8 10 1. Present the balance sheet in common-size format. 2. Present the income statement in common-size format down through net income. Required 1 Required 2 Present the balance sheet in common-size format. (Round your answers to 1 decimal place. Due to rounding, figures may not fully reconcile down a column.) Assets Current assets: Cash Lydex Company Common-Size Balance Sheets 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, $75 par value Retained earnings Total stockholders' equity Total liabilities and equity This Year Last Year % % % % % % % %