You have just been hired as a financial analyst for LydexCompany, a manufacturer of safety helmets. Your boss has asked youto perform a comprehensive analysis of the company’s financialstatements, including comparing Lydex’s performance to its majorcompetitors. The company’s financial statements for the last twoyears are as follows: Lydex Company Comparative Balance Sheet ThisYear Last Year Assets Current assets: Cash $ 950,000 $ 1,110,000Marketable securities 0 300,000 Accounts receivable, net 2,500,0001,600,000 Inventory 3,550,000 2,000,000 Prepaid expenses 250,000190,000 Total current assets 7,250,000 5,200,000 Plant andequipment, net 9,420,000 9,000,000 Total assets $ 16,670,000 $14,200,000 Liabilities and Stockholders' Equity Liabilities:Current liabilities $ 3,960,000 $ 2,880,000 Note payable, 10%3,640,000 3,040,000 Total liabilities 7,600,000 5,920,000Stockholders' equity: Common stock, $70 par value 7,000,0007,000,000 Retained earnings 2,070,000 1,280,000 Total stockholders'equity 9,070,000 8,280,000 Total liabilities and stockholders'equity $ 16,670,000 $ 14,200,000 Lydex Company Comparative IncomeStatement and Reconciliation This Year Last Year Sales (all onaccount) $ 15,810,000 $ 13,080,000 Cost of goods sold 12,648,0009,810,000 Gross margin 3,162,000 3,270,000 Selling andadministrative expenses 1,183,714 1,584,000 Net operating income1,978,286 1,686,000 Interest expense 364,000 304,000 Net incomebefore taxes 1,614,286 1,382,000 Income taxes (30%) 484,286 414,600Net income 1,130,000 967,400 Common dividends 340,000 483,700 Netincome retained 790,000 483,700 Beginning retained earnings1,280,000 796,300 Ending retained earnings $ 2,070,000 $ 1,280,000To begin your assignment you gather the following financial dataand ratios that are typical of companies in Lydex Company’sindustry: Current ratio 2.3 Acid-test ratio 1.2 Average collectionperiod 40 days Average sale period 60 days Return on assets 8.7 %Debt-to-equity ratio 0.66 Times interest earned ratio 5.7Price-earnings ratio 10 Required: 1. Present the balance sheet incommon-size format. 2. Present the income statement in common-sizeformat down through net income.

resent the balance sheet in common-size format. (Round youranswers to 1 decimal place. Due to rounding, figures may not fullyreconcile down a column.)

Lydex Company Common-Size Balance Sheets This Year Last Year Assets Current assets: Cash % % Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets 0.0 0.0 Plant and equipment, net Total assets 0.0 % 0.0 % Liabilities and Stockholders'Equity Liabilities: Current liabilities % % Note payable, 10% Total liabilities 0.0 0.0 Stockholders’ equity: Common stock, $70 par value Retained earnings Total stockholders’ equity 0.0 0.0 Total liabilities andequity 0.0 % 0.0 %

resent the income statement in common-size format down throughnet income. (Round your answers to 1 decimal place. Due torounding, figures may not fully reconcile down a column.)

	Lydex Company Common-Size Income Statements This Year Last Year Sales % % Cost of goods sold Gross margin Selling and administrativeexpenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income % %