Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pau Sabin organized Sabin Electronics 10 yours ago to produce and sell several electronic devices on which he had secured patents Athough the company thas

image text in transcribed
Pau Sabin organized Sabin Electronics 10 yours ago to produce and sell several electronic devices on which he had secured patents Athough the company thas been felly profithble. It is now experiencing a severe cash shortage. For this reason. it is reguesting a 5540,000 long term loan from Gulpont State Bank, 5120,000 of which will be used to bolster the Cash account and 5420,000 of which Wit be used to modernite equipment. The compony's fintincial statements for the two most recent years follow: During the post 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 morgin. The company also hired a new sales manegec who has expanded sales into several new territories. Sales terms are 2/10,n/30. All soles are on account. Requlred: 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 emount of working capital. b. The curtent ratio. c. The acid-test ratio. d. The average collection period. (The accounts receivable at the beginning of last year totaled 5290.000 ] e. The average sale period. (The inventory at the beginning of last year totaled $540,000 ) E. The operating cycle. 9. The total asset turnover. (The total assets at the beginning of last year were $2,540,000 ) h. The debt-to-equity ratio. 1. The times interest earned ratio. 1. The equity muliplier. (The total stockholders' equity at the beginning of last year totaled $1343,000 ) 2. For both this year and last year: a. Present the balance sheet in common-size format for both this year and last year. b. Present the income statement in common-sire format down through net income for both this yeat and last year

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

No Nonsense Project Auditing A Practical Guide For The PMO

Authors: Lisa Nash

1st Edition

0993403522, 978-0993403521

More Books

Students also viewed these Accounting questions