Lydex Company Comparative Balance Sheet
This Year Last Year
Assets
Current assets:
Cash $ 940,000 $ 1,200,000
Marketable securities 0 300,000
Accounts receivable, net 2,620,000 1,720,000
Inventory 3,580,000 2,300,000
Prepaid expenses 250,000 190,000
Total current assets 7,390,000 5,710,000
Plant and equipment, net 9,480,000 9,030,000
Total assets $ 16,870,000 $ 14,740,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities $ 3,880,000 $ 2,940,000
Note payable, 10% 3,660,000 3,060,000
Total liabilities 7,540,000 6,000,000
Stockholders' equity:
Common stock, $75 par value7,500,000 7,500,000
Retained earnings 1,830,000 1,240,000
Total stockholders' equity 9,330,000 8,740,000
Total liabilities and $ 16,870,000 $ 14,740,000
stockholders' equity
Lydex Company
Comparative Income Statement and Reconciliation
This Year Last Year
Sales (all on account) $ 15,840,000 $ 13,380,000
Cost of goods sold 12,672,000 10,035,000
Gross margin 3,168,000 3,345,000
Selling and administrative 1,473,429 1,596,000
expenses
Net operating income 1,694,571 1,749,000
Interest expense 366,000 306,000
Net income before taxes 1,328,571 1,443,000
Income taxes (30%) 398,571 432,900
Net income 930,000 1,010,100
Common dividends 340,000 505,050
Net income retained 590,000 505,050
Beginning retained earnings 1,240,000 734,950
Ending retained earnings $1,830,000 $ 1,240,000
Current ratio 2.4
Acid-test ratio 1.2
Average collection period 40 days
Average sale period 60 days
Return on assets 9.1 %
Debt-to-equity ratio 0.69
Times interest earned ratio 5.7
Price-earnings ratio 10
Required:
1. Present the balance sheet in common-size format.
2. Present the income statement in common-size format down through net income