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 companys financial statements for the two most recent years follow:

SABIN ELECTRONICS
Comparative Balance Sheet
	This Year			Last Year
Assets
Current assets:
Cash	$	62,600		$	106,000
Marketable securities					12,800
Accounts receivable, net		439,400			212,000
Inventory		881,000			424,000
Prepaid expenses		18,000			15,400
Total current assets		1,401,000			770,200
Plant and equipment, net		1,080,000			979,800
Total assets	$	2,481,000		$	1,750,000
Liabilities and Shareholders Equity
Liabilities:
Current liabilities	$	732,000		$	532,000
Bonds payable, 12%		300,000			300,000
Total liabilities		1,032,000			832,000
Shareholders equity:
Preferred shares, no par ($6; 18,640 shares issued)		233,000			233,000
Common shares, no par (unlimited authorized, 26,000 issued)		260,000			260,000
Retained earnings		956,000			425,000
Total shareholders equity		1,449,000			918,000
Total liabilities and shareholders equity	$	2,481,000		$	1,750,000

SABIN ELECTRONICS
Comparative Income Statement
	This Year			Last Year
Sales	$	4,600,000		$	3,850,000
Less: Cost of goods sold		3,531,000			3,040,000
Gross margin		1,069,000			810,000
Less: Operating expenses		598,000			481,000
Net operating income		471,000			329,000
Less: Interest expense		36,000			36,000
Net income before taxes		435,000			293,000
Less: Income taxes (30%)		130,500			87,900
Net income		304,500			205,100
Dividends paid:
Preferred dividends		20,000			20,000
Common dividends		82,800			66,100
Total dividends paid		102,800			86,100
Net income retained		201,700			119,000
Retained earnings, beginning of year		599,200			480,200
Retained earnings, end of year	$	800,900		$	599,200

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	%
Priceearnings 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 places and 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 $210,000).

e. The inventory turnover in days (the inventory at the beginning of last year totalled $420,000).

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.)