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 $580.000 long-term loan from Gulfport State Bank, $140,000 of which will be used to bolster the Cash account and $440,000 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 $ 100,000 $ 230,000 Marketable securities 26,000 Accounts receivable, net 581,800 380,000 Inventory 1,025,000 675,000 Prepaid expenses 26.000 30.gee Total current assets 1,732,000 1,341,000 plant and equipment, net 1,759,600 1,450,000 Total assets $ 3,491,600 $ 2,791,000 Liabilities and Stockholders Equity Liabilities Current Liabilities $ 340,000 510,000 Bonds payable, 12% 650.000 650.000 Total liabilities 1,490,000 1.160,000 Stockholders' equity! Common stock, $15 par 720,000 770,000 Retained earnings 1,231,600 361.000 Total stockholders' equity 2001 600 16.000 Total lisbilities and stockholders' equity $ 3,491,600 $ 2,791,000 Sabin Electronics Comparative Income Statement and Reconciliation This Year Sales $5,400,000 Cost of goods sold 3955.000 Gross margin 1,445.000 Selling and administrative expenses 669,000 Net operating income 776,000 Interest expense 20.000 Niet income before taxes 698,000 Income taxes (30) 209,400 Het Income 480,600 Common dividends 118.000 Net Income retained 370,600 Beginning retained earnings 561.000 Ending retained earnings $ 1,231,600 Last Year $4,590,000 3.530.000 1.060,000 564,00 496,000 211.900 418.000 125,400 292.600 97.000 195,600 665,400 861.000 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 210./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 The acid-test ratio d. The average collection period (The accounts receivable at the beginning of last year totaled $330,000) e. The average sale period. (The inventory at the beginning of last year totaled $580,000.) 1 The operating cycle g The total asset turnover (The total assets at the beginning of last year were $2.660,000) h. The debt-to-equity ratio The times interest earned ratio. The equity multiplier (The total stockholders equity at the beginning of last year totaled $1621000) 2 For both this year and last year a Present the balance sheet in common size format b. Present the income statement in common-size format down through net income Rea 1 Reg 2A Reg 28 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 $330,000.) (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 $580,000.) (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.) 9. The total asset turnover (The total assets at the beginning of last year were $2,660,000.) (Round your answers to 2 decimal places.) h. The debt-to-equity ratio. (Round your answers to 2 decimal places) 1. The times interest earned ratio. (Round your answers to 2 decimal places.) 1. The equity multiplier. (The total stockholders' equity at the beginning of last year totaled $1,621,000.) (Round your answers to 2 decimal places.) Show less This Year Last Year days a Working capital b. Current ratio c Acid-test ratio d Average collection period a. Average sale period Operating cycle 9 Total asset turnover h Debt-to-equity ratio i Times interest eamed ratio i Equity multiplier days days days days days Req2A > Req 1 Reg 2A Reg 28 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 % 0.0 00 00 001 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, 515 par Retained earnings Total stockholders equity Total abilities and equity 0.0 00 00 0.0 0.0% 00% Present the income statement in common-size format down through net income. (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 00 Interest expense Net Income before taxes 0.0 Income taxes Net Income 0.0 0.0 00% 00%