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:

Lydex Company Comparative Balance Sheet This Year Last Year Assets Current assets $ 820,000 Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses 2,300,000 3,500,000 240,000 1,250,000 300,000 1,400,000 2,000,000 180,000 Total current assets Plant and equipment, net 6,860,000 9,320,000 5,130,000 8,950,000 Total assets $16,180,000 14,080,000 Liabilities and Stockholders' Equity Liabilities Current liabilities Note payable, 10% $ 3,910,000 3,600,000 2,780,000 3,000,000 Total liabilities 7,510,000 5,780,000 Stockholders' equity: Common stock, $75 par value Retained earnings 7,500,000 1,170,000 7,500,000 800,000 8,300,000 $16,180,000 4,080,000 Total stockholders' equity 8,670,000 Total liabilities and stockholders' equity