Paul Sabin organized Sabin Electronics 10 years ago in order 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 certain key items of equipment. The company's financial statements for the two most recent years follow:

SABIN ELECTRONICSComparative Balance SheetThis YearLast YearAssetsCurrent assets:Cash$73,000$130,000Marketable securities16,000Accounts receivable, net514,600260,000Inventory1,033,000520,000Prepaid expenses20,40018,600Total current assets1,641,000944,600Plant and equipment, net1,240,0001,205,400Total assets$2,881,000$2,150,000Liabilities and Shareholders' EquityLiabilities:Current liabilities$860,000$600,000Bonds payable, 12%400,000400,000Total liabilities1,260,0001,000,000Shareholders' equity:Preferred shares, no par ($6; 22,480 shares issued)281,000281,000Common shares, no par (unlimited authorized,

34,000 issued)340,000340,000Retained earnings1,000,000529,000Total shareholders' equity1,621,0001,150,000Total liabilities and shareholders' equity$2,881,000$2,150,000SABIN ELECTRONICSComparative Income StatementThis YearLast YearSales$5,400,000$4,250,000Less: Cost of goods sold4,139,0003,360,000Gross margin1,261,000890,000Less: Operating expenses702,000529,000Net operating income559,000361,000Less: Interest expense48,00048,000Net income before taxes511,000313,000Less: Income taxes (30%)153,30093,900Net income357,700219,100Dividends paid:Preferred dividends20,00020,000Common dividends97,20072,900Total dividends paid117,20092,900Net income retained240,500126,200Retained earnings, beginning of year656,400530,200Retained earnings, end of year$896,900$656,400During 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. Assume that the following ratios are typical of firms in the electronics industry:

Current ratio2.5to 1Acid-test (quick) ratio1.3to 1Average age of receivables18daysInventory turnover in days60daysDebt-to-equity ratio0.90to 1Times interest earned6.0timesReturn on total assets13%Price-earnings ratio12Required:1.To assist the Gulfport Bank in making a decision about the loan, compute the following ratios for both this year and last year(Use 365 days a year. Round your intermediate calculations to 1 decimal place. Round Debt-to-equity ratio to 3 decimal placesand other answers to 2 decimal places.):

a.The amount of working capital.b.The current ratio.c.The acid-test (quick) ratio.d.The average age of receivables (the accounts receivable at the beginning of last year totalled $258,000).

e.The inventory turnover in days (the inventory at the beginning of last year totalled $516,000).

f.The debt-to-equity ratio.g.The times interest earned.

2.For both this year and last year:(a)Present the balance sheet in common-size format.(Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 1 decimal place.)

(b)Present the income statement in common-size format down through net income.(Input all values as positive values. Round your answers to 1 decimal place.)