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. Forthis reason, it is requesting a $660000 longterm loan from Gulfport State Bank. $190000 of which will be used to bolster the Cash account and $490,000 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 $ 135,666 6 336,666 Marketable securities 0 15,066 ccounts receivable, net ?11,000 460,066 Inventory 1,125,000 ??5,066 Prepaid expenses 383999 49,355 Total current assets 2,609,000 1,640,066 Plant and equipment, net 2,245,000 1,550,066 Total assets 5 4,254,999 $ 331933399 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 650,000 5 400,066 Bonds payable, 12% 660,000 600,066 Total liabilities 1,550,000 1,200,000 Stockholders' equity: Common stock, $15 par 6?0,000 6?0,066 Retained earnings 1,?34,000 1,120,066 Total stockholders'I equity 235943999 119993955 Total liabilities and stockholders' equity $ 432543999 $ 331933599 Sabin Electronics Comparative Income Statement and Reconciliation This Year Last Year Sales :3 5,900,066 $ 4,690,066 Cost of goods sold 4,955,999 335333999 Gross margin 1,645,066 1,260,066 Selling and administrative expenses 660,066 564,066 Net operating income 1,156,066 6?6,066 Interest expense 95,066 96,066 Net income before taxes 1,060,066 560,066 Income taxes (30%) 3135999 1F43999 Net income ?42,066 406,066 Common dividends 126,066 10?,066 Net income retained 614,066 290,066 Beginning retained earnings 1,120,066 621,066 Ending retained earnings $ 1,?34,000 $ 1,120,066 During the past year, the company introduced several new product lines and raised the selling prices on a number ofold 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. 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 ofworking capital. 2). The current ratio. ' he acidtest ratio. ."he average collection period. (The accounts receivable at the beginning of last year totaled $430,000.) The average sale period. [The inventory at the beginning oflast year totaled $680,000.} .T1e operating cycle. g. "he total asset turnover. {The total assets at the beginning of last year were $3,150,000.) '1. The debttoequity ratio. i. Te times interest earned ratio. '. The equity multiplier. {The total stockholders' equity at the beginning oflast yeartotaled $1,980,000.) rump 2. For both this year and last year: a. Present the balance sheet in common-size format for both this year and last year. 3. Present the income statement in commonsize format down through net income for both this year and last year. Complete this question by entering your answers in the tabs below. Reg 1 Reg ZA Reg 23 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 $430,000.) (Round your intermediate calculations and nal 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 $680,000.) (Round your intermediate calculations and nal answers to 2 decimal place. Use 355 days in a year.) f. The operating cycle. (Round your intermediate calculations and nal answers to 2 decimal place. Use 355 days in a year.) g. The total asset turnover. {The total assets at the beginning of last year were $3,150,000.) {Round your answers to 2 decimal places.) h. The debtto-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 $1,930,000.) [Round your answers to 2 decimal places.) Show less; __ b. Current ratio c. Acid-test ratio d. Average collection period e. Average sale period f. Operating cycle g. Total asset turnover i. Times interest earned ratio j. Eouihr multiplier \fRea l REIII 2A REIII ZB 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.) Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income lnte rest expense Net income before taxes Income taxes Net income