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 fallly profitable, it is now experiencing a severe cash shortage. For this reason, it is requesting a $530,000 long-term loan from Gulfport State Bank, $115,000 of which will be used to bolster the Cash account and $415,000 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 12,000 180,000 Marketable securities 0 21,000 Accounts receivable, net 516,000 330,000 Inventory 980,000 625,000 Prepaid expenses 22,000 25.000 Total current assets 1,600,000 1,181,000 plant and equipment, net 1,570 200 1400,000 Total assets $ 3,170,200 $ 2,581,000 Liabilities and Stockholders Equity Liabilities Current liabilities 5 815,000 $ 460,000 Bonds payable, 12% 750,000 750,000 Total liabilities 1,565.000 1,210,000 Stockholders' equity: Common stock, 515 par 720,000 220,000 Retained earnings 885,200 651,000 Total stockholders equity 1,605,200 1,371,000 Total liabilities and stockholders equity 53,170,200 $ 2,581,000 0 You skipped this question in the previous attempt B. Sabin Electronics Comparative Income Statement and Reconciliation This Year Last Year Sales $ 5,150,000 $4,440,000 Cost of goods sold 3,905,000 3,480,000 Gross margin 1,245,000 960,000 Selling and administrative expenses 659,000 554,000 Net operating income 586,000 405,000 Interest expense 90,000 90,000 Net Income before taxes 496,000 316,000 Income taxes (30%) 148,800 94,800 Net Income 347,200 221,200 Common dividends 113,000 92,000 Net Income retained 234,200 129,200 Beginning retained earnings 651,000 $21,800 Ending retained earnings 5 885,200 $ 651,000 ook int rences 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 soles manager, who has expanded sales into several new territories Sales terms are 3/10./30. All sales are on account. Assume Paul Sebin has asked you to assess his company's profitability and stock market performance Required: 1. You decide first to assess the company's stock market performance for both this year and last year, computer a. The earnings per shore. There has been no change in common stock over the last two years b. The dividend yield ratio The company's stock is currently selling for $55 per share, last year it sold for $50 per share. c. The dividend payout ratio d. The price-earnings ratio. (Assume that the Industry norm for the price earnings ratio is 10) e. The book value per share of common stock 2. You decide next to assess the company's profitability Compute the following for both this year and last year The gross margin percentage b. The net profit margin percentage Complete this question by entering your answers in the tabs below. Required 1 Required 2 You decide first to assess the company's stock market performance. For both this year and last year, compute: a. The earings per share. There has been no change in common stock over the last two years. (Round your answers to 2 decimal places.) b. The dividend yield ratio. The company's stock is currently selling for $55 per share; last year it sold for $50 per share. (Do not round intermediate calculations, Round your percentage answers to 1 decimal place (t.e., 0.1234 should be entered as 12.3).) c. The dividend payout ratio. (Do not round intermediate calculations. Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) d. The price-camings ratio. (Assume that the industry norm for the pncq; earnings ratio is 10.) (Do not round intermediate e. The book value per share of common stock. (Round your answers to 2 decimal places.) Show less This Year Last Year a Earnings per share b. Dividend yield ratio c Dividend payout ratio di Pnce earrings ratio e Book value per share % % % % Red Required 2 >
