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 $610,000 long-term loan from Gulfport State Bank, $155,000 of which will be used to bolster the Cash account and $455,000 of which will be used to modernize equipment. The company's financial statements for the two most recent years follow: Sabin Electronica Comparative Balance Sheet This Year Last Year Assets Current assets Cash $ 114,000 0 620,000 1,055,000 30.000 1,819,000 1,977.800 $ 3,796,800 $ 260,000 29,000 410,000 705,000 33,000 1,437,000 1,480,000 $ 2,917.000 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, 128 Total liabilities Stockholde equity Common stock, $15 par Retained earninga Total stockholders' equity Total liabilities and stockholders' equity $ 855,000 800,000 1,655.000 800.000 1.341,800 2,141.800 3 3,796,000 $ 410,000 800.000 1.210.000 800,000 902.000 1.707.000 52.917.000 Sabin Electronics Comparative Income Statement and Reconciliation This Year Last Year Sales $ 5,550,000 $ 4,680,000 Cost of goods sold 3,985,000 3,560,000 Gross margin 1,565,000 1,120,000 Selling and administrative expenses 675,000 570,000 Net operating Incote 890,000 550,000 Interest expense 96,000 96.000 Net Income before taxes 794,000 454,000 Income taxes (305) 238,200 136,200 Net income 555,800 317,800 Common dividends 121.000 100,000 Net income retained 434,800 217,800 Deginning retained earnings 907.000 1689.200 Ending retained earnings 5.1.341,800 5 907,000 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 3/10, 1/30. 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. a The amount of working capital b. The current ratio c. The acid-test ratio. d. The average collection period. (The accounts receivable at the beginning of last year totaled $360,000) e. The average sole period (The inventory ot the beginning of last year totaled $610,000) 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 3/10, 1/30. All sales are on account. Required: 1 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. c. The acid-test ratio. d. The average collection period. (The accounts receivable at the beginning of last year totaled $360,000.) e. The average sale period. (The inventory at the beginning of last year totaled $610,000.) 9. The total asset turnover (The total assets at the beginning of last year were $2,890,000) h. The debt to equity ratio. The times interest earned ratio. J. The equity multiplier. (The total stockholders' equity at the beginning of last year totaled $1,697,000.) 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. Complete this question by entering your answers in the tabs below. Reg 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 $360,000.) (Round your intermediate calculations and final 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 $610,000.) (Round your intermediate calculations and final answers to 2 decimal place. Use 365 days in a year.) f. The operating cycle. (Round your intermediate calculations and final answers to 2 decimal place. Use 365 days in a year.) 9. The total asset turnover. (The total assets at the beginning of last year were $2,890,000.) (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.) 3. The equity multiplier. (The total stockholders' equity at the beginning of last year totaled $1,697,000.) (Round your answers to 2 decimal places.) Show less 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 $360,000.) (Round your intermediate calculations and final 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 $610,000.) (Round your intermediate calculations and final answers to 2 decimal place, Use 365 days in a year.) f. The operating cycle. (Round your intermediate calculations and final answers to 2 decimal place. Use 365 days in a year.) g. The total asset turnover. (The total assets at the beginning of last year were $2,890,000.) (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 $1,697,000.) (Round your answers to 2 decimal places.) Show less This Year Last Year a. Working capital b. Current ratio c. Acid-test ratio d. Average collection period e. Average sale period Operating cycle 9. Total asset turnover h Debt-to-equity ratio Times interest eamed ratio i Equity multiplier days days days days days days Rec" Req 2A > 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 Plant and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 12% Total liabilities Stockholders' equity: Common stock, $15 par Retained earnings Total stockholders' equity Total liabilities and equity % % % % % % Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 2B Present the income statement in common-size format down through net income. (Round your answers to 1 decimal place.) Last Year Sabin Electronics Common-Size Income Statements This Year Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net Income before taxes Income taxes % Not Income