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 assets: Cash 128,000 310,000 Marketable securities 0 13,000 460,000 755,000 38,000 1,576,000 1,450,000 Accounts receivable, net Inventory 685,000 1,105,000 34,000 Prepaid expenses 1,952,000 2,061,000 Total current assets Plant and equipment, net $ 4,013,000 Total assets $3,026,000 Liabilities and Stockholders Equity Liabilities: Current liabilities $ 880,000 750,000 $ 460,000 750,000 Bonds payable, 12 Total liabilities 1,630,000 1,210,000 Stockholders equity: Common stock, $15 par Retained earnings Total stockholders equity 850,000 850,000 1,533,000 2,383,000 966,000 1,816,000 Total liabilities and stockholders' equity $4,013,000 $3,026,000 Sabin Electronics Comparative Income Statement and Reconciliation This Year Last Year Sales $5,800,000 4,035,000 1,765,000 685,000 1,080,000 90,000 4,830,000 3,610,000 1,220,000 580,000 640,000 90,000 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes 990,000 550,000 165,000 Income taxes (308) 297,000 385,000 105,000 280,000 686,000 Net income 693,000 126,000 567,000 Common dividends Net income retained Beginning retained earnings 966,000 $1,533,000 $ 966,000 Ending retained earnings 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. 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 $410,000.) (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) e. The average sale period. (The inventory at the beginning of last year totaled $660,000.) (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) f. The operating cycle. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) g. The total asset turnover. (The total assets at the beginning of last year were $2,986,000.) (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 $1,806,000.) (Round your answers to 2 decimal places.) Show lessA This Year Last Year a. Working capital b. Current ratio 16 C. Acid-test ratio d. Average collection period days days e. Average sale period f.Operating cycle days days days days Total asset turnover g. h. Debt-to-equity ratio i. Times interest earned ratio jEquity multiplier Rea 1 Rea 2A Present the balance sheet in common-size format. (Round your answers to 1 decimal place.) Sabin Electronics Common-Size Balance Sheets This Year Last Year Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets 0.0 0.0 Plant and equipment, net 0.0 % 0.0 % Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 12% Total liabilities 0.0 0.0 Stockholders' equity: Common stock, $15 par Retained earnings Total stockholders' equity 0.0 0.0 0.0 % 0.0 % Total liabilities and equity Present the income statement in common-size format down through net income. (Round your answers to 1 decimal place. **. . Sabin Electronics Common-Size Income Statements This Year Last Year Sales % Cost of goods sold Gross margin 0.0 0.0 Selling and administrative expenses Net operating income 0.0 0.0 Interest expense Net income before taxes 0.0 0.0 Income taxes 0.0 % 0.0 % Net income Req 2B Req 2A