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	$	66,500		$	115,000
Marketable securities					14,000
Accounts receivable, net		467,600			230,000
Inventory		938,000			460,000
Prepaid expenses		18,900			16,600
Total current assets		1,491,000			835,600
Plant and equipment, net		1,140,000			1,064,400
Total assets	$	2,631,000		$	1,900,000
Liabilities and Shareholders Equity
Liabilities:
Current liabilities	$	780,000		$	557,500
Bonds payable, 12%		400,000			400,000
Total liabilities		1,180,000			957,500
Shareholders equity:
Preferred shares, no par ($6; 20,080 shares issued)		251,000			251,000
Common shares, no par (unlimited authorized, 29,000 issued)		290,000			290,000
Retained earnings		910,000			401,500
Total shareholders equity		1,451,000			942,500
Total liabilities and shareholders equity	$	2,631,000		$	1,900,000

SABIN ELECTRONICS
Comparative Income Statement
	This Year			Last Year
Sales	$	4,900,000		$	4,000,000
Less: Cost of goods sold		3,759,000			3,160,000
Gross margin		1,141,000			840,000
Less: Operating expenses		637,000			499,000
Net operating income		504,000			341,000
Less: Interest expense		48,000			48,000
Net income before taxes		456,000			293,000
Less: Income taxes (30%)		136,800			87,900
Net income		319,200			205,100
Dividends paid:
Preferred dividends		20,000			20,000
Common dividends		88,200			68,650
Total dividends paid		108,200			88,650
Net income retained		211,000			116,450
Retained earnings, beginning of year		615,400			498,950
Retained earnings, end of year	$	826,400		$	615,400

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 $228,000).
e.	The inventory turnover in days (the inventory at the beginning of last year totalled $456,000).
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.)