NEED FROM F- J AND ON THE TABLE COMMON STOCK, $15 par

Problem 15-18 Common-Size Statements and Financial Ratios for a Loan Application [LO15-1, LO15-2, LO15-3, LO15-4] 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 $500,000 long-term loan from Gulfport State Bank, $100,000 of which will be used to bolster the Cash account and $400,000 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 assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses 70,000 0 480,000 950,000 20,000 150,000 18,000 300,000 600,000 22,000 Total current assets Plant and equipment, net 1,520,000 1,480,000 1,090,000 1,370,000 Total assets $3,000,000 $ 2,460,000 Liabilities and Stockholders Equity Liabilities: Current liabilities Bonds payable, 12% $ $ 800,000 600,000 430,000 600,000 Total liabilities 1,400,000 1,030,000 Stockholders' equity: Common stock, $15 par Retained earnings 750,000 850,000 750,000 680,000 Total stockholders' equity 1,600,000 1,430,000 Total liabilities and equity $3,000,000 $ 2,460,000 Last Year $ 4,350,000 3,450,000 Sabin Electronics Comparative Income Statement and Reconciliation This Year Sales $5,000,000 Cost of goods sold 3,875,000 Gross margin 1,125,000 Selling and administrative expenses 653,000 Net operating income 472,000 Interest expense 72,000 900,000 548,000 352,000 72,000 Net income before taxes Income taxes (30%) 400,000 120,000 280,000 84,000 Net income Common dividends 280,000 110,000 196,000 95,000 Net income retained Beginning retained earnings 170,000 680,000 101,000 579,000 Ending retained earnings $ 850,000 $ 680,000 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 2/10, 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 ratios for both this year and last year: a. The amount of working capital. This Year Last Year $ 720,000 $ 660,000 Working capital b. The current ratio. (Round your answers to 2 decimal places.) This Year Last Year 2.53 Current ratio 1.90 c. The acid-test ratio. (Round your answers to 2 decimal places.) This Year Last Year Acid-test ratio 0.69 1.09 d. The average collection period. (The accounts receivable at the beginning of last year totaled $250,000.) (Round your intermediate calculations and final answers to 1 decimal place. Use 365 days in a year.) This Year 28.5 days Last Year 23.1 days Average collection period e. The average sale period. (The inventory at the beginning of last year totaled $500,000.) (Round your intermediate calculations and final answers to 1 decimal place. Use 365 days in a year.) This Year Last Year 57.9 days Average sale period 73.0 days f. The operating cycle. (Round your answers to 1 decimal place.) This Year Last Year Operating cycle days 0.7 days g. The total asset turnover. (The total assets at the beginning of last year were $2,420,000.) (Round your answers to 2 decimal places.) This Year Last Year Total asset turnover h. The debt-to-equity ratio. (Round your answers to 3 decimal places.) This Year Last Year Debt-to-equity ratio i. The times interest earned ratio. (Round your answers to 1 decimal place.) This Year Last Year Times interest earned ratio j. The equity multiplier. (The total stockholders' equity at the beginning of last year totaled $1,420,000.) (Round your answers to 2 decimal places.) This Year Last Year Equity multiplier 2. For both this year and last year: a. Present the balance sheet in common-size format. (Round your percentage answers to 1 decimal place (i.e., 0.123 should be entered as 12.3).) Sabin Electronics Common-Size Balance Sheets This Year Last Year Assets Current assets: Cash 2.3% 6.1 % Marketable securities 0.0 0.7 16.0 12.2 24.4 31.7 0.7 0.9 50.7 44.3 Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: 49.3 55.7 100.0 % 100.0 % Current liabilities 26.7 % 17.5 % 20.0 24.4 46.7 41.9 Bonds payable, 12% Total liabilities Stockholders' equity: Common stock, $15 par Retained earnings Total stockholders' equity Total liabilities and equity 28.3 27.6 28.3 27.6 75.0 % 69.5%