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 $ 1,280,000 300,000 2,120,000 2,300,000 210,000 $1,040,000 3,020,000 3,680,000 270,000 Accounts receivable, net Inventory Prepaid expenses 6,210,000 9,130,000 Total current assets 8,010,000 9,680,000 Plant and equipment, net $17,690,000 Total assets $15,340,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 10% $ 4,090,000 3,720,000 $3,140,000 3,120,000 Total liabilities 7,810,000 6,260,000 Stockholders' equity: Common stock, $75 par value Retained earnings 7,500,000 2,380,000 7,500,000 1,580,000 Total stockholders' equity 9,880,000 9,080,000 Total liabilities and stockholders' equity $17,690,000 $15,340,000 Lydex Company Comparative Income Statement and Reconciliation This Year $15,940,000 12,752,000 Last Year Sales (all on account) Cost of goods sold $14,380,000 10,785,000 Gross margin Selling and administrative expenses 3,595,000 1,636,000 3,188,000 1,216,000 Net operating income Interest expense 1,972,000 372,000 1,959,000 312,000 Net income before taxes Income taxes (30%) 1,600,000 480,000 1,647,000 494,100 Net income Common dividends 1,120,000 320,000 1,152,900 576,450 Net income retained 800,000 1,580,000 576,450 1,003,550 Beginning retained earnings $ 2,380,000 $1,580,000 Ending retained earnings 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 2.3 1.2 32 days 60 days 8.6 % Average collection period Average sale period Return on assets Debt-to-equity ratio Times interest earned ratio Price-earnings ratio 0.69 5.8 10 Required: 1. Present the balance sheet in common-size format. (Round your percentage answers to 1 decimal place i.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 This Year Last 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, $75 par value Retained earnings Total stockholders equity Total liabilities and equity % 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, 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