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: Lydes Company Comparative lance Sheet This Year Last Year Assets Current assets: Cash Marketable securities Accounts receivable, nat Inventory Prepaid Total current assets Plant and equipment, et Total assets Liabilities and Stockholders Equity Liabi Current liabilition Note payable, 10% Total Habilities Stockholders' equity: Common stack, $75 par value Retained earnings Total stockholders' equity Total abilities and stockholders equity $ 1,020,000 $1,300,000 100,000 2,010,000 3,010,000 3,600,000 2,100,000 370,000 210,000 7,100,000 1,200 $ 17,530,000 5,010,000 9,110,000 $15,000,000 $ 4,070,000 $3,100,000 3,700,000 3,100,000 7,776,206 6,300,000 7,500,000 3,500,000 2,200,000 1,320,000 9,700,000 $17,530,000 $15,020,000 Lydex Company Comparative Income Statement and Reconciliation This Year $ 15,930,000 12,716,000 Last Year $14,100,000 10,635,000 Sales (all on account) Cost of goods sold Gross margi Selling and administrative expense Net operating income Net incone before taxes Income taxes (305) Net Incone Cannon dividends Net income retained Seginning retained earnings Inding retained warnings 3,161,000 1,545,000 1,014,000 1,628,000 2,170,000 170,000 1,917,000 110,000 1,000,000 540,000 1,250,000 1,107,000 1,124,508 120,000 543,458 940,000 563,458 1,330,000 357,558 2,250,000 $1,128,20 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-text ratio Average sale period Return an assets Average collection period o days 9.9% 3.3 I.I 12 days Debt-to-equity ratio 9.7 Times interest earned ratio 5.9 Price-earnings ratio 10 3. You decide, finally, to assess the company's liquidity and asset management. For both this year and last year, compute 5. 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 st the beginning of last year totaled $1,730,000) (Use 365 days in a year. Round your Intermediate calculations and final answers to 2 decimal place.) e. The average sale period. (The inventory at the beginning of last year totaled $2,090,000) (Use 365 days In a year. Round your Intermediate calculations and final answers to 2 decimal place.) f. The operating cycle. (Round your intermediate calculations and final answers to 2 decimal place.) 9. The total asset turnover. (The total assets at the beginning of last year totaled $14,670,000) (Round your final answers to 2 decimal places.)