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: Assets Current assets: Lydex Company Comparative Balance Sheet This Year Last Year 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% $ 880,000 0 2,380,000 3,520,000 240,000 7,020,000 9,360,000 $ 16,380,000 $ 1,120,000 300,000 1,480,000 2,200,000 180,000 5,280,000 8,970,000 $ 14,250,000 Total liabilities Stockholders' equity: Common stock, $75 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Lydex Company $ 3,930,000 3,620,000 7,550,000 7,500,000 1,330,000 8,830,000 $ 16,380,000 $ 2,820,000 3,020,000 5,840,000 7,500,000 910,000 8,410,000 $ 14,250,000 Comparative Income Statement and Reconciliation Sales (all on account) Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income Common dividends Net income retained This Year $ 15,780,000 12,624,000 3,156,000 1,794,000 1,362,000 362,000 Last Year $ 12,780,000 9,585,000 3,195,000 1,572,000 1,623,000 302,000 1,000,000 1,321,000 300,000 396,300 700,000 924,700 280,000 462,350 420,000 462,350 910,000 447,650 $ 1,330,000 $ 910,000 Beginning retained earnings Ending retained earnings 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 Required: 30 days 60 days 8.4% 0.68 1. Present the balance sheet in common-size format. 2. Present the income statement in common-size format down through net income.