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 companys financial statements, including comparing Lydexs performance to its major competitors. The companys financial statements for the last two years are as follows: Lydex CompanyComparative Balance Sheet This YearLast YearAssets Current assets: Cash$940,000$1,180,000Marketable securities 0 300,000Accounts receivable, net 2,620,000 1,720,000Inventory 3,580,000 2,300,000Prepaid expenses 250,000 190,000Total current assets 7,390,000 5,690,000Plant and equipment, net 9,480,000 9,030,000Total assets$16,870,000$14,720,000Liabilities and Stockholders' Equity Liabilities: Current liabilities$3,990,000$2,940,000Note payable, 10% 3,660,000 3,060,000Total liabilities 7,650,000 6,000,000Stockholders' equity: Common stock, $75 par value 7,500,000 7,500,000Retained earnings 1,720,000 1,220,000Total stockholders' equity 9,220,000 8,720,000Total liabilities and stockholders' equity$16,870,000$14,720,000 Lydex CompanyComparative Income Statement and Reconciliation This YearLast YearSales (all on account)$15,840,000$13,380,000Cost of goods sold 12,672,000 10,035,000Gross margin 3,168,000 3,345,000Selling and administrative expenses 1,602,000 1,596,000Net operating income 1,566,000 1,749,000Interest expense 366,000 306,000Net income before taxes 1,200,000 1,443,000Income taxes (30%) 360,000 432,900Net income 840,000 1,010,100Common dividends 340,000 505,050Net income retained 500,000 505,050Beginning retained earnings 1,220,000 714,950Ending retained earnings$1,720,000$1,220,000 To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Companys industry: Current ratio2.4 Acid-test ratio1.1 Average collection period40daysAverage sale period60daysReturn on assets9.1%Debt-to-equity ratio0.7 Times interest earned ratio5.7 Price-earnings ratio10 rev: 04_27_2020_QC_CS-209476Required:1. You decide first to assess the companys performance in terms of debt management and profitability. Compute the following for both this year and last year: (Round your "Percentage" answers to 1 decimal place and other answers to 2 decimal places.) a. The times interest earned ratio.b. The debt-to-equity ratio.c. The gross margin percentage.d. The return on total assets. (Total assets at the beginning of last year were $13,050,000.)e. The return on equity. (Stockholders equity at the beginning of last year totaled $8,214,950. There has been no change in common stock over the last two years.)f. Is the companys financial leverage positive or negative?

		This Year		Last Year
a.	The times interest earned ratio
b.	The debt-to-equity ratio
c.	The gross margin percentage		%		%
d.	The return on total assets		%		%
e.	The return on equity		%		%
f.	Is the companys financial leverage positive or negative?