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:

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:

d. The return on total assets.

3. You decide, finally, to assess the companys liquidity and asset management. For both this year and last year, compute:

d. The average collection period. (The accounts receivable at the beginning of last year totaled $1,730,000.) (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal place.)

e. The average sale period. (The inventory at the beginning of last year totaled $2,090,000.) (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal place.)

f. The operating cycle. (Round your intermediate calculations and final answer to 2 decimal place.)

g. The total asset turnover. (The total assets at the beginning of last year totaled $14,670,000.) (Round your final answers to 2 decimal places.)

Lvdex CompanV Comparative Balance Sheet This Year Last Year Assets Current assets: 1,020,000 1,260,000 Marketable securities Accounts receivable, net Inventory Prepaid expenses 300,000 2,040,000 2,100,000 210,000 2,940,0e0 3,660,000 270,000 Total current assets 7,890,000 9,640,000 5,910,000 9,110,000 Plant and equipment, net $17,530,000 15,020,000 Total assets Liabilities and Stockholders Equity Liabilities: Current liabilities $ 4,070,000 3,100,000 Note payable, 10% Total liabilities 3,700,000 7,770,000 3,100,000 6,200,000 Stockholders' equity: Common stock, $75 par value Retained earnings Total stockholders' equity 7,500,0e0 2,260,000 9,760,000 7, 500,000 1,320,000 8,820,000 $17,530,000 $15,020,000 Total liabilities and stockholders equity Lydex Company Comparative Income Statement and Reconciliation This Year $. 15,920,000 12,736,000 3,184,000 1,014,000 Last Year Sales (all on account) Cost of goods sold Gross margin Selling and administrative expenses 14,180,000 10,635,000 3,545,000 1,628,000 Net operating income 2,170,000 370,000 1,917,000 310,000 Interest expense Net income before taxes 1,800,000 540,000 1,607,000 Income taxes (30%) 482,100 Net income 1,260,000 320,000 1,124,900 562,450 Common dividends Net income retained 940,000 562,45 757,550 Beginning retained earnings 1,320,000 $ 2,260,000 1,320,000 Ending retained earnings Current ratio Acid-test ratio 2.3 1.1 32 days 60 days Average collection period Average sale period 9.9% Return on assets Debt-to-equity ratio Times interest earned ratio 0.7 5.9 Price-earnings ratio 10