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 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, 18% Total liabilities Stockholders' equity: Common stock, $70 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Lydex Company $870,000 B $ 1,110,000 300,000 2,340,000 3,510,000 240,000 6,960,000 9,340,000 $ 16,300,000 $3,750,000 3,600,000 7,350,000 7,000,000 1,950,000 8,950,000 1,440,000 2,100,000 180,000 5,130,000 8,960,000 $ 14,090,000 $ 16,300,000 $ 2,660,000 3,000,000 5,660,000 7,000,000 1,430,000 8,430,000 $ 14,090,000 Comparative Income Statement and Reconciliation Sales (all on account) Cost of goods sold This Year $ 15,770,000 12,616,000 3,154,000 1,551,143 1,682,857 360,000 1,242,857) Last Year $ 12,680,000 9,510,000 3,170,000 1,568,000 1,682,000 300,000 1,382,000 372,857 390,600 870,000 911,400 350,000 455,700 520,000 455,700 1,430,000 974,300 $ 1,430,000 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 $ 1,950,000 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 8.3% Debt-to-equity ratio 8.67 Times interest earned ratio 5.9 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.