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:

Required:

a.) Present the balance sheet in common-size format.

b.) Present the income statement in common-size format down through net income.

Lydex Company Comparative Balance Sheet This Year Last Year $ 860,000 0 2,820,000 3,630,000 260,000 7,570,000 9,580,000 $ 17,150,000 $ 1,230,000 300,000 1,920,000 2,300,000 200,000 5,950,000 9,080,000 $ 15,030,000 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, 10% Total liabilities Stockholders' equity: Common stock, $70 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 4,550,000 3,680,000 8,230,000 $ 3,040,000 3,080,000 6,120,000 7,000,000 1,920,000 8,920,000 $17,150,000 7,000,000 1,910,000 8,910,000 $15,030,000 2,124,288 Lydex Company Comparative Income Statement and Reconciliation This Year Last Year Sales (all on account) $ 15,890,000 $ 13,880,000 Cost of goods sold 12,712,000 10,410,000 Gross margin 3,178,000 3,470,000 Selling and administrative expenses 1,616,000 1144 Net operating income 1,053,714 1,854,000 Interest expense 368,000 308,000 Net income before taxes 685,714 1,546,000 Income taxes (30%) 205,714 463,800 Net income 480,000 1,082,200 Common dividends 470,000 541,100 Net income retained 10,000 541,100 Beginning retained earnings 1,910,000 1,368,900 Ending retained earnings $ 1,920,000 $ 1,910,000 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 Average sale period Return on assets Debt-to-equity ratio Times interest earned ratio Price-earnings ratio 2.4 1.2 32 days 60 days 9.68 0.69 5.9 10 Lydex Company Common-Size Balance Sheets This Year Last Year Assets Current assets: Cash % % Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net 0.0 0.0 Total assets 0.0 % 0.0 % Liabilities and Stockholders' Equity Liabilities: % % 0.0 0.0 Current liabilities Note payable, 10% Total liabilities Stockholders' equity: Common stock, $70 par value Retained earnings Total stockholders' equity Total liabilities and equity 0.0 0.0 0.0 % 0.0 % Lydex Company Common-Size Income Statements This Year Last Year Sales % % Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income % %