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Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on which he had secured patents. Although the company has been fairly profitable, it is now experiencing a severe cash shortage. For this reason, it is requesting a $680,000 long-term loan from Gulfport State Bank. $190,000 of which will be used to bolster the Cash account and $490,000 of which will be used to modernize equipment. The company's financial statements for the two most recent years follow: Sabin Electronics Comparative Balance Sheet This Year Last Year Assets Current assotsi Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assoto Plant and equipment. net Total assets Liabilities and Stockholders Equity Liabilities: Current liabilities Bonds payable. 124 Total liabilities Stockholders equity! Comon stock, $15 par Retained earnings Total stockholders equity Total liabilities and stockholders' equity 5 135,000 o 711,000 1,125,000 38,000 2,009,000 2,245,000 $ 4,254,000 330,000 15,000 480,000 775,000 40,000 1,640,000 1,550,000 $ 3,190,000 5 850,000 800,000 1,650,000 5 400,000 B00.000 1,200,000 870,000 1,734,000 2,604,000 $4,250,000 870,000 1120.000 1.990.000 $ 3,190,000 Sabin Electronics Comparative Income Statement and Reconciliation This Year Last Year Sales $ 5,900,000 $ 4,890,000 Cost of goods sold 4,055,000 3.630,000 Gross margin 1,845,000 1,260,000 Selling and administrativo expenses 689,000 584,000 Not operating income 1,156,000 676,000 Interest expense 96,000 96,000 Net income before taxes 1,060,000 580,000 Income taxes (308) 318,000 174,000 Net income 742,000 406,000 Common dividends 128,000 107.000 Net income retained 614,000 299,000 Beginning retained earnings 1,120,000 821,000 Ending retained earnings $ 1,734,000 3.1, 120.000 During the past year, the company introduced several new product lines and raised the selling prices on a number of old product lines In order to improve its profit margin. The company also hired a new sales manager, who has expanded sales into several new territories. Sales terms are 3/10,n/30. All sales are on account. Required: 1. To assist in approaching the bank about the loan, Paul has asked you to compute the following ratlos for both this year and last year. a. The amount of working capital. b. The current ratio. c. The acid-test ratio. d. The average collection period. (The accounts receivable at the beginning of last year totaled $430,000.) e. The average sale period. (The inventory at the beginning of last year totaled $680,000.) f. The operating cycle. g. The total asset turnover. (The total assets at the beginning of last year were $3,150,000.) h. The debt-to-equity ratio The times interest earned ratio j. The equity multiplier (The total stockholders' equity at the beginning of last year totaled $1,980,000) 2. For both this year and last year: a. Present the balance sheet in common-size format b. Present the income statement in common-size format down through net income. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Reg 28 To assist in approaching the bank about the loan, Paul has asked you to compute the following ratios for both this year and last year: a. The amount of working capital. b. The current ratio. (Round your answers to 2 decimal places.) c. The acid-test ratio. (Round your answers to 2 decimal places.) d. The average collection period. (The accounts receivable at the beginning of last year totaled $430,000.) (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) e. The average sale period. (The inventory at the beginning of last year totaled $680,000.) (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) 1. The operating cycle. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) 9. The total asset turnover. (The total assets at the beginning of last year were $3,150,000.) (Round your answers to 2 decimal places.) h. The debt-to-equity ratio. (Round your answers to 2 decimal places.) 1. The times interest earned ratio. (Round your answers to 2 decimal places.) J. The equity multiplier. (The total stockholders' equity at the beginning of last year totaled $1,980,000.) (Round your answers to 2 decimal places.) Show less d. The average collection period. (The accounts receivable at the beginning of last year totaled $430,000.) (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) e. The average sale period. (The inventory at the beginning of last year totaled $680,000.) (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) 1. The operating cycle. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) 9. The total asset turnover. (The total assets at the beginning of last year were $3,150,000.) (Round your answers to 2 decimal places.) h. The debt-to-equity ratio. (Round your answers to 2 decimal places.) 1. The times interest earned ratio. (Round your answers to 2 decimal places.) 1. The equity multiplier. (The total stockholders' equity at the beginning of last year totaled $1,980,000.) (Round your answers to 2 decimal places.) Show less This Year 1,159,000 2.36 Last Year 1,240,000 4.10 206 0.99 days a. Working capital b. Current ratio c Acid-test ratio d. Average collection period 0 Average sale period Operating cycle 9. Total asset turnover h. Debt-to-equity ratio 1. Timos interest eamed ratio Equity multiplier days days days days days