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 ELECTRONICS
Comparative Balance Sheet
	This Year		Last Year
Assets
Current assets:
Cash	$	56,100		$	91,000
Marketable securities					10,800
Accounts receivable, net		392,400			182,000
Inventory		786,000			364,000
Prepaid expenses		16,500			13,400
Total current assets		1,251,000			661,200
Plant and equipment, net		1,000,000			838,800
Total assets	$	2,251,000		$	1,500,000
Liabilities and Shareholders' Equity
Liabilities:
Current liabilities	$	652,000		$	489,500
Bonds payable, 12%		300,000			300,000
Total liabilities		952,000			789,500
Shareholders' equity:
Preferred shares, no par ($6; 16,240 shares issued)		203,000			203,000
Common shares, no par (unlimited authorized, 21,000 issued)		210,000			210,000
Retained earnings		886,000			297,500
Total shareholders' equity		1,299,000			710,500
Total liabilities and shareholders' equity	$	2,251,000		$	1,500,000

SABIN ELECTRONICS
Comparative Income Statement
	This Year		Last Year
Sales	$	4,100,000		$	3,600,000
Less: Cost of goods sold		3,151,000			2,840,000
Gross margin		949,000			760,000
Less: Operating expenses		533,000			451,000
Net operating income		416,000			309,000
Less: Interest expense		36,000			36,000
Net income before taxes		380,000			273,000
Less: Income taxes (30%)		114,000			81,900
Net income		266,000			191,100
Dividends paid:
Preferred dividends		20,000			20,000
Common dividends		73,800			61,850
Total dividends paid		93,800			81,850
Net income retained		172,200			109,250
Retained earnings, beginning of year		558,200			448,950
Retained earnings, end of year	$	730,400		$	558,200

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. Assume that the following ratios are typical of firms in the electronics industry:

Current ratio	2.5 to 1
Acid-test (quick) ratio	1.3 to 1
Average age of receivables	18	days
Inventory turnover in days	60	days
Debt-to-equity ratio	0.90 to 1
Times interest earned	6.0	times
Return on total assets	13	%
Price-earnings ratio	12

Required:

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 $180,000).

e. The inventory turnover in days (the inventory at the beginning of last year totalled $360,000).

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.)