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: Lydex Company Comparative Balance Sheet This Year Last Year $ 820,000 2,860,000 3,640,000 270,000 7,590,000 9,600,000 $ 17,190,000 $ 1,060,000 300,000 1,960,000 2,400,000 210,000 5,930,000 9,090,000 $ 15,020,000 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, $75 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 4,050,000 3,700,000 7,750,000 $ 3,060,000 3,100,000 6,160,000 7,500,000 1,940,000 9,440,000 $17,190,000 7,500,000 1,360,000 8,860,000 $ 15,020,000 Lydex Company Comparative Income Statement and Reconciliation This Year Sales (all on account) $ 15,900,000 Cost of goods sold 12,720,000 Gross margin 3,180,000 Selling and administrative expenses 1,410,000 Net operating income 1,770,000 Interest expense 370,000 Net income before taxes 1,400,000 Income taxes (30%) 420,000 Net income 980,000 Common dividends 400,000 Net income retained 580,000 Beginning retained earnings 1,360,000 Ending retained earnings $ 1,940,000 Last Year $ 13,980,000 10,485,000 3,495,000 1,620,000 1,875,000 310,000 1,565,000 469,500 1,095,500 547,750 547,750 812, 250 $ 1,360,000 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 2.3 1.2 32 days 60 days 9.7% 0.65 5.7 10 Required: 1. Present the balance sheet in common-size format. 2. Present the income statement in common-size format down through net income. Required 1 Required 2 Present the balance sheet in common-size format. (Round your answers to 1 decimal place. Due to rounding, figures may not fully reconcile down a column.) Last Year % % 0.0 Lydex Company Common-Size Balance Sheets This Year Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets 0.0 Plant and equipment, net Total assets 0.0 % Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 10% Total liabilities 0.0 Stockholders' equity: Common stock, $75 par value Retained earnings Total stockholders' equity 0.0 Total liabilities and equity 0.0 % 0.0 % % % 0.0 0.0 0.0 % Required 1 Required 2 Present the income statement in common-size format down through net income. (Round your answers to 1 decimal place. Due to rounding, figures may not fully reconcile down a column.) 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 % %