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Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on which he had secured patents. Although the company has

Paul Sabin organized Sabin Electronics 10 years ago 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 $510,000 long-term loan from Gulfport State Bank, $105,000 of which will be used to bolster the Cash account and $405,000 of which will be used to modernize 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 $ 74,000 $ 160,000
Marketable securities 0 19,000
Accounts receivable, net 490,000 310,000
Inventory 955,000 605,000
Prepaid expenses 23,000 23,000
Total current assets 1,542,000 1,117,000
Plant and equipment, net 1,376,400 1,300,000
Total assets $ 2,918,400 $ 2,417,000
Liabilities and Stockholders Equity
Liabilities:
Current liabilities $ 750,000 $ 440,000
Bonds payable, 12% 650,000 650,000
Total liabilities 1,400,000 1,090,000
Stockholders' equity:
Common stock, $20 par 700,000 700,000
Retained earnings 818,400 627,000
Total stockholders equity 1,518,400 1,327,000
Total liabilities and equity $ 2,918,400 $ 2,417,000
Sabin Electronics
Comparative Income Statement and Reconciliation
This Year Last Year
Sales $ 5,050,000 $ 4,380,000
Cost of goods sold 3,885,000 3,460,000
Gross margin 1,165,000 920,000
Selling and administrative expenses 655,000 550,000
Net operating income 510,000 370,000
Interest expense 78,000 78,000
Net income before taxes 432,000 292,000
Income taxes (30%) 129,600 87,600
Net income 302,400 204,400
Common dividends 111,000 90,000
Net income retained 191,400 114,400
Beginning retained earnings 627,000 512,600
Ending retained earnings $ 818,400 $ 627,000

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 3/10, n/30. All sales are on account.

Assume that Paul Sabin has asked you to assess his companys profitability and stock market performance.

Required:
1.

You decide first to assess the companys stock market performance. For both this year and last year, compute:

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2.

You decide next to assess the companys profitability. Compute the following for both this year and last year:

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What I originally got for those parts:

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e. The book value per share of common stock. (Round your answers to 2 decimal places.) This Year Last Year Book value per share

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