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 $620,000 long-term loan from Gulfport State Bank, $160,000 of which will be used to bolster the Cash account and $460,000 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 assets: Cash $ 118,000 $ 270,000 Marketable securities 30,000 Accounts receivable, net 633,000 420,000 Inventory 1,065,000 715,000 Prepaid expenses 30,000 34,000 Total current assets 1,846,000 1,469,000 Plant and equipment, net 1,969,200 1,490,000 Total assets $3,815,200 $2,959,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 820,000 $ 420,000 Bonds payable, 12% 850,000 850,000 Total liabilities 1,670,000 1,270,000 Stockholders' equity: Common stock, $15 par 810,000 810,000 Retained earnings 1,335, 200 879,000 Total stockholders' equity 2, 145,200 1,689,000 Total liabilities and $3,815,200 stockholders' equity $2,959,000 Sabin Electronics Comparative Income Statement and Reconciliation This Year Last Ye Sales $5,600,000 $4,710,000 Cost of goods sold 3,995,000 3,570,000 Gross margin 1,685,600 1,140,000 Selling and administrative expenses 677,000 572,000 Net operating income 928,000 568,000 Interest expense 102,000 102,000 Net income before taxes 826,000 466,000 Income taxes (304) 247,800 139,800 Net income 578,200 326,200 Common dividends 122,800 101,000 Net income retained 456,200 225,200 Beginning retained earnings 879,900 653,800 Ending retained earnings $1,335,200 $ 879,000 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, 1/30. All sales are on account. Required: 1 To assist in approaching the bank about the loan, Paul has asked you to compute the following ratios for both this year and last year: a. The amount of working capital b. The current ratio. C. The acid-test ratio. d. The average collection period. (The accounts receivable at the beginning of last year totaled $370,000.) e. The average sale period (The Inventory at the beginning of last year totaled $620,000.) ) t. The operating cycle. 9. The total asset turnover. (The total assets at the beginning of last year were $2,919,000.) n. The debt-to-equity ratio. L The times interest earned ratio. 1. The equity multiplier. (The total stockholders' equity at the beginning of last year totaled $1,679,000.) 2. For both this year and last year a. Present the balance sheet in common-size format for both this year and last year. b. Present the income statement in common-size format down through net income for both this year and last year. To assist in approaching the bank about the loan, Paul has asked you to compute the following ratios for both this year and last year: a. The amount of working capital. b. The current ratio. (Round your answers to 2 decimal places.) c. The acid-test ratio. (Round your answers to 2 decimal places.) d. The average collection period. (The accounts receivable at the beginning of last year totaled $370,000.) (Round your intermediate calculations and final answers to 2 decimal place. Use 365 days in a year.) e. The average sale period. (The inventory at the beginning of last year totaled $620,000.) (Round your intermediate calculations and final answers to 2 decimal place. Use 365 days in a year) f. The operating cycle. (Round your intermediate calculations and final answers to 2 decimal place. Use 365 days in a year.) g. The total asset turnover. (The total assets at the beginning of last year were $2,919,000.) (Round your answers to 2 decimal places.) h. The debt-to-equity ratio. (Round your answers to 2 decimal places.) i. The times interest earned ratio. (Round your answers to 2 decimal places.) j. The equity multiplier. (The total stockholders' equity at the beginning of last year totaled $1,679,000.) (Round your answers to 2 decimal places.) Show less This Year Last Year a. Working capital b. Current ratio c. Acid-test ratio Average collection d. period days days e. Average sale period days days f. Operating cycle days days g. Total asset turnover h. Debt-to-equity ratio Times interest I. earned ratio 1. Equity multiplier Ren Res 21 Req 1 Reg 2A Req 2B Present the balance sheet in common-size format for both this year and last year. (Round your an place.) Sabin Electronics Common-Size Balance Sheets This Year Last Year % % 0.0 0.0 0.0 % 0.0 % Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 12% Total liabilities Stockholders' equity: Common stock, $15 par Retained earnings Total stockholders' equity Total liabilities and equity + % % 0.0 0.0 0.0 0.0 0.0 % 0.0 % ( Req1 Req 2B > D. Present the income statement in mon-size format through net income for both this year and last year. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Present the income statement in common-size format down through net Income for both this year and last year. (Round your answers to 1 decimal place.) Last Year % 0.0 Sabin Electronics Common-Size Income Statements This Year Sales % Cost of goods sold Gross margin 0.0 Selling and administrative expenses Net operating income 0.0 Interest expense Net income before taxes 0.0 Income taxes Net income 0.0 % 0.0 0.0 0.0%