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: Assets Sabin Electronics Comparative Balance Sheet This Year Last Year Current assetas Cash Marketable securities Accounts receivable, net Inventory Total current assets Prepaid expenses Plant and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities Current liabilities Bonds payable, 128 Total liabilities Stockholders' equity Common stock, $15 par Retained earnings Total stockholders' equity Total liabilities and stockholders equity $ 128,000 $310,000 0 13,000 685,000 1,105,000 34,000 1,952,000 2,061,000 $4,013,000 460,000 755,000 38,000 1,576,000 1,450,000 $ 3,026,000 $880,000 750,000 1,630,000 $460,000 750,000 1,210,000 850,000 1,533,000 2,383,000 850,000 966,000 1,016,000 $ 3,026,000 $4,013,000 Sabin Electronice Comparative Income Statement and Reconciliation: Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense. Net income before taxes Income taxos (30%) Net income This Year $5,800,000 4,035,000 1,765,000 685,000 1,080,000 Last Year $ 4,830,000 3,610,000 1,220,000 580,000 640,000 90,000 90,000 990,000 550,000 297,000 165,000 693.000 385.000