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 Lydex Company $ 820,000 0 2,300,000 3,500,000 240,000 6,860,000 9,320,000 $ 16,180,000 $ 1,250,000 300,000 1,400,000 2,000,000 180,000 5,130,000 8,950,000 $ 14,080,000 $ 3,910,000 3,600,000 7,510,000 8,670,000 $ 16,180,000 $ 2,780,000 3,000,000 5,780,000 7,500,000 800,000 8,300,000 $ 14,080,000 7,500,000 1,170,000 Comparative Income Statement and Reconciliation Sales (all on account) Cost of goods sold This Year $ 15,760,000 12,608,000 3,152,000 1,863,429 Last Year $ 12,580,000 9,435,000 3,145,000 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 1,564,000 1,288,571 1,581,000 360,000 300,000 928,571 1,281,000 278,571 384,300 650,000 896,700 280,000 448,350 370,000 448,350 800,000 351,650 $ 1,170,000 $ 800,000 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. 8.2% Debt-to-equity ratio 0.66 Times interest earned ratio 5.8 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.