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Required Information The following information applies to the questions displayed below) 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: This Year Last Year 970, eee Lydex Company Comparative Balance Sheet Assets Current assets 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, lex Total liabilities Stockholders' equity! Common stock, 578 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 2,740,000 3,610,00 260, Bee 7,580,000 9,540,000 $ 17,120,000 1,210, 800 300,000 1,840,000 2,100,000 200, Bee 5,650,000 9,060,000 $ 14,718,000 $ 4,020,000 3,680,000 7,780,000 $ 3,000,000 3,080,000 6,080,000 7,eee eee 2,420,000 9.420,899 $19,120,000 7,800,000 1,630,000 8,630,000 $ 14,710, eee pany 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, eee Selling and administrative expenses 1,106,000 1,608,000 Net operating income 2,068,888 1,812,880 Interest expense 368 eve 388,000 Net income before taxes 1,700, eee 1,584, Bee Income taxes (36X) 510, mee 451,200 Net income 1,190,000 1,052,800 Common dividends 4ee, eee 526 400 Net Income retained 790,000 526, 488 Beginning retained earnings 1,630,000 1,103,600 Ending retained earnings $ 2,428,8805 1,638,800 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 2.4 1.1 4 days 6 days 9.4% 0.2 5.7 18 Required: 1. You decide tirst to assess the company's performance in terms of debt management and profitability Compute the following for both this year and last year (Round your "Percentage" answers to 1 decimal place and other answers to 2 decimal places.) e. The times interest eamed ratio. b. The debtto-equity ratio c. The gross margin percentage d. The return on total assets. (Total assets at the beginning of last year were $13,080,000) e. The return on equity. (Stockholders' equity at the beginning of last year totaled $8,103,600. There has been no change in common stock over the last two years.) I is the company's financial leverage positive or negative? 5.62 5.88 0.82 The times interest earned ratio b. The debt-to-equity ratio The gross margin percentage d. The return on total assets e. The return on equity 1. Is the company's financial leverage positive or negative? 0.70 25.01% 20.01% % * %