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, $ 78 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 960,000 0 2,700,000 3,900,000 240,000 7,800,000 9,300,000 $ 17,100,000 $ 1,260,000 300,000 1,800,000 2,400,000 180,000 5,940,000 8,940,000 $ 14,880,000 $ 3,900,000 3,600,000 7,500,000 7,800,000 1,800,000 9,600,000 $ 17,100,000 $ 2,760,000 3,000,000 5,760,000 $ 14,880,000 7,800,000 1,320,000 9,120,000 Lydex Company Comparative Income Statement and Reconciliation 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 This Year $ 15,750,000 12,600,000 3,150,000 1,590,000 Last Year $ 12,480,000 9,900,000 2,580,000 1,560,000 1,560,000 1,020,000 360,000 300,000 1,200,000 720,000 360,000 216,000 840,000 504,000 360,000 252,000 480,000 252,000 1,320,000 1,068,000 $ 1,800,000 $ 1,320,000 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 2.3 1.2 30 days. Average sale period 60 days Return on assets 9.58 Debt-to-equity ratio. 0.65 Times interest earned ratio 5.7 10 Price-earnings ratio Required: 1. Present the balance sheet in common-size format. 2. Present the income statement in common-size format down through net income. Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets Lydex Company Common-Size Balance Sheets 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 equity This Year Last Year 0.0 % % 0.0 0.0 % 0.0 % 0.0 % 0.0 % 0.0 0.0 0.0 % 0.0 % Complete this question by entering your answers in the tabs below. Required 1 Required 2 Present the income statement in common-size format down through net income. (Round your answers to 1 decimal place. Due to rounding, figures may not fully reconcile down a column.) Lydex Company Common-Size Income Statements Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income This Year Last Year % % % %