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	$	54,800		$	88,000
Marketable securities					10,400
Accounts receivable, net		383,000			176,000
Inventory		767,000			352,000
Prepaid expenses		16,200			13,000
Total current assets		1,221,000			639,400
Plant and equipment, net		1,000,000			810,600
Total assets	$	2,221,000		$	1,450,000
Liabilities and Shareholders Equity
Liabilities:
Current liabilities	$	636,000		$	481,000
Bonds payable, 12%		300,000			300,000
Total liabilities		936,000			781,000
Shareholders equity:
Preferred shares, no par ($6; 15,760 shares issued)		197,000			197,000
Common shares, no par (unlimited authorized, 20,000 issued)		200,000			200,000
Retained earnings		888,000			272,000
Total shareholders equity		1,285,000			669,000
Total liabilities and shareholders equity	$	2,221,000		$	1,450,000

SABIN ELECTRONICS
Comparative Income Statement
	This Year			Last Year
Sales	$	4,000,000		$	3,550,000
Less: Cost of goods sold		3,075,000			2,800,000
Gross margin		925,000			750,000
Less: Operating expenses		520,000			445,000
Net operating income		405,000			305,000
Less: Interest expense		36,000			36,000
Net income before taxes		369,000			269,000
Less: Income taxes (30%)		110,700			80,700
Net income		258,300			188,300
Dividends paid:
Preferred dividends		20,000			20,000
Common dividends		72,000			61,000
Total dividends paid		92,000			81,000
Net income retained		166,300			107,300
Retained earnings, beginning of year		550,000			442,700
Retained earnings, end of year	$	716,300		$	550,000

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 $174,000).

e. The inventory turnover in days (the inventory at the beginning of last year totalled $348,000).

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.)