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 Assets This Year Last Year Current assets: $ Cash $960,000 1,260,000 Marketable securities e 300,000 Accounts receivable, net Inventory 2,700,000 1,800,000 3,900,000 2,400,000 Prepaid expenses Total current assets Plant and equipment, net Total assets 9,300,000 8,940,000 $ $ 17,100,000 14,880,000 240,000 180,000 7,800,000 5,940,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 10% Total liabilities Stockholders' equity: 3,900,000 2,760,000 3,600,000 3,000,000 7,500,000 5,760,000 Common stock, $78 par value Retained earnings Total stockholders' equity 7,800,000 7,800,000 1,800,000 1,320,000 9,600,000 9,120,000 Total liabilities and stockholders' equity Lydex Company $ 17,100,000 14,880,000 Comparative Income Statement and Reconciliation Sales (all on account) This Year $ Last Year $ 15,750,000 12,480,000 Cost of goods sold 12,600,000 9,900,000 Gross margin 3,150,000 2,580,000 Selling and administrative 1,590,000 expenses 1,560,000 Net operating income 1,560,000 1,020,000 Interest expense 360,000 300,000 Net income before taxes 1,200,000 720,000 Income taxes (30%)) 360,000 216,000 Net income 840,000 504,000 Common dividends 360,000 252,000 Net income retained 480,000 Beginning retained earnings 1,320,000 252,000 1,068,000 Ending retained earnings $ $ 1,800,000 1,320,000 To begin your assignment you gether the following financial data and ratios that are typical of companies in Lydex Company's industry Current ratio Acid-test ratio 2.3 1.2 Average collection 30 days period Average sale period 60 days Return on assets 9.5% Debt-to-equity ratio Tines interest earned ratio Price-earnings ratio 0.65 5.7 10 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 $1,560,000.) (Use 365 days in a year. Round your intermediate calculations and final answers to 1 decimal place.) e. The average sale period. (The inventory at the beginning of last year totaled $1,920,000.) (Use 365 days in a year. Round your intermediate calculations and final answers to 1 decimal place.) f. The operating cycle. (Round your intermediate calculations and final answers to 1 decimal place.) g. The total asset turnover. (The total assets at the beginning of last year totaled $12,960,000.) (Round your final answers to 2 decimal places.) This Year Last Year a. Working capital b. The current ratio c. The acid-test ratio d. The average collection days days period e. The average sale days days period f. The operating cycle days days g. The total asset turnover