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 $520000 long-term loan from Gulfport State Bank, $110.000 of which will be used to bolster the Cash account and $410,000 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 18.000 190.000 Marketable securities Total ISE SE Liabilities and stockholders Equity $ 10.000 Benda pale, 120 450.000 700.000 1.250.000 710.000 Common Stocic, S15 pa Retased ning Total stockholders' equity Total liabilities and stockholders' equity $3,071,000 $2,499,000 Sabin Electronics Comparative Income Statement and Reconciliation Gros megin Selling and administrative expenses Net operating income 84.000 Met income before taxe 199,200 91,200 Beginning retained ning Ending retained earnings 112.000 212,000 699,000 35,500 51%,200 639,000 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 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 $270,000.) (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 $520,000.) (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 $2,480,000.) (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 $1,339,000.) (Round your answers to 2 decimal places.) Show less This Year Last Year days a Working capital b. Cumentatie 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. Acid test ratio a. The amount of working capital d Average collection period b. The current ratio The acid test ratio e Average sale period d. The average collection period. (The accounts receivable at the beginning of last year totaled S270,000.) f Operating cycle e The average sale period. (The inventory at the beginning of last year totaled $520.000) 9 Total asset turnover The operating cycle The total asset turnover (The total assets at the beginning of last year were $2.480,000) h Debt-to-equity ratio h. The debt-to-equity ratio i Times interest earned ratio i The times interest earned ratio. J. The equity multiplier (The total stockholders' equity at the beginning of last year totaled $1,339,000) i Equity multiplier days days
