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 $660,000 long-term loan from Gulfport State Bank, $180,000 of which will be used to bolster the Cash account and $480,000 of which will be used to modernize equipment. The company's financial statements for the two most recent years follow. Sabin Electronics Comparative Balance Sheet This Year Last Year Assets Current assetst Cash 128,000 $ 310,000 Marketable securities 0 13,000 Accounts receivable, net 685,000 460,000 Inventory 1,105,000 755,000 Prepaid expenses 34,000 38,000 Total current assets 1,952,000 1,576,000 Plant and equipment, net 2,061,000 1,450,000 Total assets $ 4,013,000 $ 3,026,000 Liabilities and Stockholders Equity Liabilities: Current liabilities $ 880,000 $ 460,000 Bonds payable, 125 750,000 750,000 Total liabilities 1,630,000 1,210,000 Stockholders equity: Common stock, $20 par 850,000 850,000 Retained earnings 1,533.000 966,000 Total stockholders' equity 2,383,000 1,816,000 Zotal liabilities and stockholders' equity $ 4,013,000 $ 3,026,000 Sabin Electronice Comparative Income Statement and Reconciliation This Year Last Year Sales $ 5,800,000 $ 4,830,000 Cost of goods sold 4,035,000 3,610,000 Gronn margin 1,765,000 1,220,000 Selling and administrative expenses 685.000 580,000 Not operating income 1,080,000 640,000 Interest expense 90,000 90,000 Net Income before taxes 990,000 550.000 Income taxes (301) 297,000 165,000 Net income 693,000 385,000 Common dividends 126,000 105,000 Net income retained 567.000 280,000 Beginning retained earnings 966,000 686,000 Ending retained earningo $1,533,000 $ 966,000 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, 1/30. All sales are on account. 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 Paul Sabin has asked you to assess his company's profitability and stock market performance. Required: 1. You decide first to assess the company's stock market performance. For both this year and last year, compute: a. The earnings per share. There has been no change in common stock over the last two years. b. The dividend yield ratio. The company's stock is currently selling for $60 per share; last year it sold for $55 per share. c. The dividend payout ratio. d. The price-earnings ratio (Assume that the industry norm for the price-earnings ratio is 9) e. The book value per share of common stock 2. You decide next to assess the company's profitability. Compute the following for both this year and last year: a. The gross margin percentage. b. The net profit margin percentage. C. The return on total assets. (Total assets at the beginning of last year were $2,986,000.) d. The return on equity. (Stockholders' equity at the beginning of last year was $1,806,000.) e. Is the company's financial leverage positive or negative? Complete this question by entering your answers in the tabs below. Required 1 Required 2 You decide first to assess the company's stock market performance. For both this year and last year, compute: a. The earnings per share. There has been no change in common stock over the last two years. (Round your answers to 2 decimal places.) b. The dividend yield ratio. The company's stock is currently selling for $60 per share; last year it sold for $55 per share. (Do not round intermediate calculations. Round your percentage answers to 1 decimal place.) c. The dividend payout ratio. (Do not round intermediate calculations. Round your percentage answers to 1 decimal place.) d. The price earnings ratio. (Assume that the industry norm for the price-earnings ratio is 9.) (Do not round Intermediate calculations. Round your answers to 2 decimal places) e. The book value per share of common stock. (Round your answers to 2 decimal places.) Show less This Year Last Year % a. Earnings per share b. Dividend yield ratio c. Dividend payout ratio d. Price-earnings ratio e. Book value per share % % Dras 26 a. The earnings per share. There has been no change in common stock over the last two years. b. The dividend yield ratio. The company's stock is currently selling for $60 per share; last year it sold for $55 per share, c. The dividend payout ratio. d. The price-earnings ratio. (Assume that the industry norm for the price-earnings ratio is 9) e. The book value per share of common stock 2. You decide next to assess the company's profitability. Compute the following for both this year and last year: a. The gross margin percentage. b. The net profit margin percentage. c. The return on total assets. (Total assets at the beginning of last year were $2,986,000.) d. The return on equity. (Stockholders' equity at the beginning of last year was $1,806,000.) e. Is the company's financial leverage positive or negative? Complete this question by entering your answers in the tabs below. Required 1 Requirehta You decide next to assess the company's profitability. Compute the following for both this year and last year: a. The gross margin percentage. (Round your percentage answers to 1 decimal place.) b. The net profit margin percentage. (Round your percentage answers to 1 decimal place.) c. The return on total assets. (Total assets at the beginning of last year were $2,986,000.) (Round your percentage answers to 1 decimal place.) d. The return on equity (Stockholders' equity at the beginning of last year was $1,806,000.) (Round your percentage answers to 1 decimal place.) e. Is the company's financial leverage positive or negative? Show less This Year Last Year % % a. Gross margin percentage b. Net profit margin percentage c. Return on total assets d. Return on equity .. Financial Leverage % % % ***** 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 $660,000 long-term loan from Gulfport State Bank, $180,000 of which will be used to bolster the Cash account and $480,000 of which will be used to modernize equipment. The company's financial statements for the two most recent years follow. Sabin Electronics Comparative Balance Sheet This Year Last Year Assets Current assetst Cash 128,000 $ 310,000 Marketable securities 0 13,000 Accounts receivable, net 685,000 460,000 Inventory 1,105,000 755,000 Prepaid expenses 34,000 38,000 Total current assets 1,952,000 1,576,000 Plant and equipment, net 2,061,000 1,450,000 Total assets $ 4,013,000 $ 3,026,000 Liabilities and Stockholders Equity Liabilities: Current liabilities $ 880,000 $ 460,000 Bonds payable, 125 750,000 750,000 Total liabilities 1,630,000 1,210,000 Stockholders equity: Common stock, $20 par 850,000 850,000 Retained earnings 1,533.000 966,000 Total stockholders' equity 2,383,000 1,816,000 Zotal liabilities and stockholders' equity $ 4,013,000 $ 3,026,000 Sabin Electronice Comparative Income Statement and Reconciliation This Year Last Year Sales $ 5,800,000 $ 4,830,000 Cost of goods sold 4,035,000 3,610,000 Gronn margin 1,765,000 1,220,000 Selling and administrative expenses 685.000 580,000 Not operating income 1,080,000 640,000 Interest expense 90,000 90,000 Net Income before taxes 990,000 550.000 Income taxes (301) 297,000 165,000 Net income 693,000 385,000 Common dividends 126,000 105,000 Net income retained 567.000 280,000 Beginning retained earnings 966,000 686,000 Ending retained earningo $1,533,000 $ 966,000 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, 1/30. All sales are on account. 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 Paul Sabin has asked you to assess his company's profitability and stock market performance. Required: 1. You decide first to assess the company's stock market performance. For both this year and last year, compute: a. The earnings per share. There has been no change in common stock over the last two years. b. The dividend yield ratio. The company's stock is currently selling for $60 per share; last year it sold for $55 per share. c. The dividend payout ratio. d. The price-earnings ratio (Assume that the industry norm for the price-earnings ratio is 9) e. The book value per share of common stock 2. You decide next to assess the company's profitability. Compute the following for both this year and last year: a. The gross margin percentage. b. The net profit margin percentage. C. The return on total assets. (Total assets at the beginning of last year were $2,986,000.) d. The return on equity. (Stockholders' equity at the beginning of last year was $1,806,000.) e. Is the company's financial leverage positive or negative? Complete this question by entering your answers in the tabs below. Required 1 Required 2 You decide first to assess the company's stock market performance. For both this year and last year, compute: a. The earnings per share. There has been no change in common stock over the last two years. (Round your answers to 2 decimal places.) b. The dividend yield ratio. The company's stock is currently selling for $60 per share; last year it sold for $55 per share. (Do not round intermediate calculations. Round your percentage answers to 1 decimal place.) c. The dividend payout ratio. (Do not round intermediate calculations. Round your percentage answers to 1 decimal place.) d. The price earnings ratio. (Assume that the industry norm for the price-earnings ratio is 9.) (Do not round Intermediate calculations. Round your answers to 2 decimal places) e. The book value per share of common stock. (Round your answers to 2 decimal places.) Show less This Year Last Year % a. Earnings per share b. Dividend yield ratio c. Dividend payout ratio d. Price-earnings ratio e. Book value per share % % Dras 26 a. The earnings per share. There has been no change in common stock over the last two years. b. The dividend yield ratio. The company's stock is currently selling for $60 per share; last year it sold for $55 per share, c. The dividend payout ratio. d. The price-earnings ratio. (Assume that the industry norm for the price-earnings ratio is 9) e. The book value per share of common stock 2. You decide next to assess the company's profitability. Compute the following for both this year and last year: a. The gross margin percentage. b. The net profit margin percentage. c. The return on total assets. (Total assets at the beginning of last year were $2,986,000.) d. The return on equity. (Stockholders' equity at the beginning of last year was $1,806,000.) e. Is the company's financial leverage positive or negative? Complete this question by entering your answers in the tabs below. Required 1 Requirehta You decide next to assess the company's profitability. Compute the following for both this year and last year: a. The gross margin percentage. (Round your percentage answers to 1 decimal place.) b. The net profit margin percentage. (Round your percentage answers to 1 decimal place.) c. The return on total assets. (Total assets at the beginning of last year were $2,986,000.) (Round your percentage answers to 1 decimal place.) d. The return on equity (Stockholders' equity at the beginning of last year was $1,806,000.) (Round your percentage answers to 1 decimal place.) e. Is the company's financial leverage positive or negative? Show less This Year Last Year % % a. Gross margin percentage b. Net profit margin percentage c. Return on total assets d. Return on equity .. Financial Leverage % % % *****