Lydex Company Comparative Income Statement and Reconciliation This Year $15,900,000 12,720,000 Last Year $ 13,980,000 10,485,000 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: Sales (all on account) Cost of goods sold Gross margin Selling and administrative expenses 3,180,000 1,410,000 3,495,000 1,620,000 Lydex Company Comparative Balance Sheet This Year Last Year Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Net operating income Interest expense 1,770,000 370,000 1,875,000 310,000 $ 1,060,000 300,000 1,960,000 2,400,000 210,000 $ 820,000 Net income before taxes Income taxes (30%) 1,400,000 420,000 1,565,000 469,500 2,860,000 3,640,000 270,000 980,000 400,000 1,095,500 547,750 Net income Common dividends 7,590,000 9,600,000 5,930,000 9,090,000 Total current assets Net income retained 580,000 1,360,000 547,750 812,250 Plant and equipment, net Beginning retained eamings Total assets $17,190,000 $15,020,000 Ending retained earnings $ 1,940,000 $ 1,360,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities Note payable, 10% $ 3,060,000 3,100,000 To begin your assigment you gather the following financial data and ratios that are typical of companies in Lydex Company's industry: $ 4,050,000 3,700,000 Total liabilities 7,750,000 6,160,000 Current ratio 2.3 Stockholders' equity: Common stock, $75 par value Retained earnings Acid-test ratio Average collection period Average sale period Return on assets Debt-to-equity ratio Times interest earned ratio Price-earnings ratio 1.2 32 days 60 days 9.7 % 0.65 5.7 10 7,500,000 1,940,000 7,500,000 1,360,000 Total stockholders' equity 9,440,000 8,860,000 Total liabilities and stockholders' equity $17,190,000 $15,020,000