You have just been hired as a financial analyst for LydexCompany, a manufacturer of safety helmets. Your boss has asked youto perform a comprehensive analysis of the companys financialstatements, including comparing Lydexs performance to its majorcompetitors. The companys financial statements for the last twoyears are as follows: Lydex Company Comparative Balance Sheet ThisYear Last Year Assets Current assets: Cash $ 1,010,000 $ 1,250,000Marketable securities 0 300,000 Accounts receivable, net 2,900,0002,000,000 Inventory 3,650,000 2,000,000 Prepaid expenses 270,000210,000 Total current assets 7,830,000 5,760,000 Plant andequipment, net 9,620,000 9,100,000 Total assets $ 17,450,000 $14,860,000 Liabilities and Stockholders' Equity Liabilities:Current liabilities $ 4,060,000 $ 3,080,000 Note payable, 10%3,700,000 3,100,000 Total liabilities 7,760,000 6,180,000Stockholders' equity: Common stock, $70 par value 7,000,0007,000,000 Retained earnings 2,690,000 1,680,000 Total stockholders'equity 9,690,000 8,680,000 Total liabilities and stockholders'equity $ 17,450,000 $ 14,860,000 Lydex Company Comparative IncomeStatement and Reconciliation This Year Last Year Sales (all onaccount) $ 15,910,000 $ 14,080,000 Cost of goods sold 12,728,00010,560,000 Gross margin 3,182,000 3,520,000 Selling andadministrative expenses 912,000 1,624,000 Net operating income2,270,000 1,896,000 Interest expense 370,000 310,000 Net incomebefore taxes 1,900,000 1,586,000 Income taxes (30%) 570,000 475,800Net income 1,330,000 1,110,200 Common dividends 320,000 555,100 Netincome retained 1,010,000 555,100 Beginning retained earnings1,680,000 1,124,900 Ending retained earnings $ 2,690,000 $1,680,000 To begin your assigment you gather the followingfinancial data and ratios that are typical of companies in LydexCompanys industry: Current ratio 2.3 Acid-test ratio 1.1 Averagecollection period 32 days Average sale period 60 days Return onassets 9.8 % Debt-to-equity ratio .66 Times interest earned ratio5.8 Price-earnings ratio 10 rev: 09_17_2014_QC_54324,12_11_2014_QC_CS-386 Garrison 15e Recheck 2015-1-19 6.value: 10.00pointsRequired information Required: 1. You decide first to assessthe companys performance in terms of debt management andprofitability. Compute the following for both this year and lastyear: (Round your intermediate calculations and final percentageanswers to 1 decimal place. i.e., 0.123 should be considered as12.3%. Round the rest of the intermediate calculations and finalanswers to 2 decimal places.) a. The times interest earned ratio.b. The debt-to-equity ratio. c. The gross margin percentage. d. Thereturn on total assets. (Total assets at the beginning of last yearwere $13,120,000.) e. The return on equity. (Stockholders equityat the beginning of last year totaled $8,124,900. There has been nochange in common stock over the last two years.) f. Is thecompanys financial leverage positive or negative? rev:09_17_2014_QC_54324 ReferenceseBook & ResourcesWorksheetLearning Objective: 15-03 Compute and interpret financialratios that managers use for asset management purposes.LearningObjective: 15-06 Compute and interpret financial ratios thatmanagers use to assess market performance. Difficulty: 1EasyLearning Objective: 15-04 Compute and interpret financialratios that managers use for debt management purposes. LearningObjective: 15-02 Compute and interpret financial ratios thatmanagers use to assess liquidity.Learning Objective: 15-05 Computeand interpret financial ratios that managers use to assessprofitability. Check my work 7.value: 10.00 pointsRequiredinformation 2. You decide next to assess the companys stock marketperformance. Assume that Lydexs stock price at the end of thisyear is $104 per share and that at the end of last year it was $72.For both this year and last year, compute: (Round your intermediatecalculations and final percentage answers to 1 decimal place. i.e.,0.123 should be considered as 12.3%. Round the rest of theintermediate calculations and final answers to 2 decimal places.)a. The earnings per share. b. The dividend yield ratio. c. Thedividend payout ratio. d. The price-earnings ratio. e. The bookvalue per share of common stock. rev: 09_17_2014_QC_54324 Garrison15e Recheck 2015-1-22 ReferenceseBook & ResourcesWorksheetLearning Objective: 15-03 Compute and interpret financialratios that managers use for asset management purposes.LearningObjective: 15-06 Compute and interpret financial ratios thatmanagers use to assess market performance. Difficulty: 1EasyLearning Objective: 15-04 Compute and interpret financialratios that managers use for debt management purposes. LearningObjective: 15-02 Compute and interpret financial ratios thatmanagers use to assess liquidity.Learning Objective: 15-05 Computeand interpret financial ratios that managers use to assessprofitability. Check my work 8.value: 10.00 pointsRequiredinformation 3. You decide, finally, to assess the companysliquidity and asset management. For both this year and last year,compute: (Use 365 days in a year. Round your intermediatecalculations and final answer to 2 decimal places.) a. Workingcapital. b. The current ratio. c. The acid-test ratio. d. Theaverage collection period. (The accounts receivable at thebeginning of last year totaled $1,720,000.) e. The average saleperiod. (The inventory at the beginning of last year totaled$2,080,000.) f. The operating cycle. g. The total asset turnover.(The total assets at the beginning of last year totaled$14,660,000.)