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 $650,000 long-term loan from Gulfport State Bank, $175,000 of which will be used to bolster the Cash account and $475,000 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	$ 130,000	$ 300,000
Marketable securities	0	12,000
Accounts receivable, net	672,000	450,000
Inventory	1,095,000	745,000
Prepaid expenses	34,000	37,000
Total current assets	1,931,000	1,544,000
Plant and equipment, net	2,099,400	1,520,000
Total assets	$ 4,030,400	$ 3,064,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities	$ 875,000	$ 450,000
Bonds payable, 12%	750,000	750,000
Total liabilities	1,625,000	1,200,000
Stockholders' equity:
Common stock, $15 par	840,000	840,000
Retained earnings	1,565,400	1,024,000
Total stockholders equity	2,405,400	1,864,000
Total liabilities and stockholders' equity	$ 4,030,400	$ 3,064,000

Sabin Electronics
Comparative Income Statement and Reconciliation
	This Year	Last Year
Sales	$ 5,750,000	$ 4,800,000
Cost of goods sold	4,025,000	3,600,000
Gross margin	1,725,000	1,200,000
Selling and administrative expenses	683,000	578,000
Net operating income	1,042,000	622,000
Interest expense	90,000	90,000
Net income before taxes	952,000	532,000
Income taxes (30%)	285,600	159,600
Net income	666,400	372,400
Common dividends	125,000	104,000
Net income retained	541,400	268,400
Beginning retained earnings	1,024,000	755,600
Ending retained earnings	$ 1,565,400	$ 1,024,000

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, n/30. All sales are on account.

Required:. 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:

2. For both this year and last year:

Present the balance sheet in common-size format for both this year and last year.

Present the income statement in common-size format down through net income for both this year and last year.

	This Year		Last Year
a. Working capital
b. Current ratio
c. Acid-test ratio
d. Average collection period		days		days
e. Average sale period		days		days
f. Operating cycle		days		days
g. Total asset turnover
h. Debt-to-equity ratio
i. Times interest earned ratio
j. Equity multiplier