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 Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses 870,000 0 2,340,000 3,510,000 240,000 $1,110,000 300,000 1,440,000 2,100,000 180,000 Total current assets Plant and equipment, net 5,130,000 ,960,000 6,960,000 9,340,000 Total assets $16,300,000 $14,090,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 10% $ 2,660,000 3,000,000 $ 3,750,000 3,600,000 Total liabilities 7,350,000 5,660,000 Stockholders' equity Common stock, $70 par value Retained eamings 7,000,000 1,430,000 7,000,000 1,950,000 Total stockholders' equity 8,950,000 8,430,000 $14,090,000 Total liabilities and stockholders' equity $16,300,000 Lydex Company Comparative Income Statement and Reconciliation This Year $15,770,000 12,616,000 Last Year $ 12,680,000 9,510,000 Sales (all on account) Cost of goods sold Gross margin Selling and administrative expenses 3,170,000 1,568,000 3,154,000 1,551,143 Net operating income Interest expense 1,602,857 360,000 1,602,000 300,000 Net income before taxes Income taxes (30%) 1,242,857 372,857 1,302,000 390,600 Net income Common dividends 870,000 350,000 911,400 455,700 Net income retained 520,000 1,430,000 455,700 974,300 Beginning retained earnings Ending retained earnings $ 1,430,000 $1,950,000 .. To begin your assigment 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 sale period Return on assets Debt-to-equity ratio Times interest earned ratio Price-earnings ratio 2.3 1.2 30 days 60 days 8.3 % 0.67 5.9 .. 10 ta Required: 1. Present the balance sheet in common-size format. (Round your percentage answers to 1 decimal place l.e., 0.123 is considered as 12.3. Due to rounding, figures may not fully reconcile down a column.) Lydex Company Common-Size Balance Sheets Last Year This Year 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 equity 26 2. Present the income statement in common-size format down through net income. (Round your percentage answers to 1 decimal place i.e., 0.123 is considered as 12.3. Due to rounding, figurds 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