You havejust 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 nancial 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 $ 970,000 $ 1,210,000 Marketable securities 0 300,000 Accounts receivable, net 2,740,000 1,840,000 Inventory 3,610,000 2,100,000 Prepaid expenses 260,000 200,000 Total current assets 7,580,000 5,650,000 Plant and equipment, net 9,540,000 9,060,000 Total assets $17r1201000 $1477101000 Liabilities and stockholders' Equity Liabilities: Current liabilities $ 4,020,000 $ 3,000,000 Note payable, 10% 3,680,000 3,080,000 Total liabilities 7,700,000 6,080,000 Stockholders' equity: Common stock, $70 par value 7,000,000 7,000,000 Retained earnings 2,420,000 1,630,000 Total stockholders' equity 9,420,000 8,630,000 Total liabilities and stockholders' equity $17r1201000 514:7101000 Lydex Company Comparative Income Statement and Reconciliation This Year Last Year Sales (all on account) $15,870,000 $ 13,680,000 Cost of goods sold 12,696,000 10,260,000 Gross margin 3,174,000 3,420,000 Selling and administrative expenses 1,106,000 1,608,000 Net operating income 2,068,000 1,812,000 Interest expense 368,000 308,000 Net income before taxes 1,700,000 1,504,000 Income taxes (30%) 510,000 451,200 Net income 1,190,000 1,052,800 Common dividends 400,000 526,400 Net income retained 790,000 526,400 Beginning retained earnings 1,630,000 1,103,600 Ending retained earnings $ 2:420:000 $ 1:530:000 [ To begin your assignment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry: Current ratio 2.4 Acidtest ratio 1.2 Average collection period 40days Average sale period 60days Return on assets 9.4% Debttoequity ratio 0.67 Times interest earned ratio 5.7 Priceearnings ratio 10 l Present the balance sheet in common-size format. (Round your answers to 1 decimal place. Due to rounding, figures may fully reconcile down a column.) Assets Current assets: Cash Marketable securities memom _l Total current assets Plant and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Total stockholders' equity Total liabilities and equity Present the income statement in common-size format down through net income. (Round your answers to 1 decimal place Due to rounding, gures may not fully reconcile down a column.) Sales Cost of goods sold Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income