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 $590,000 long-term loan from Gulfport State Bank, $145,000 of which will be used to bolster the Cash account and $445,000 of which will be used to modernize equipment. The companys financial statements for the two most recent years follow:

Sabin Electronics
Comparative Balance Sheet
	This Year		Last Year
Assets
Current assets:
Cash	$	104,000	$	240,000
Marketable securities		0		27,000
Accounts receivable, net		594,000		390,000
Inventory		1,035,000		685,000
Prepaid expenses		26,000		31,000
Total current assets		1,759,000		1,373,000
Plant and equipment, net		1,751,000		1,420,000
Total assets	$	3,510,000	$	2,793,000
Liabilities and Stockholders Equity
Liabilities:
Current liabilities	$	845,000	$	520,000
Bonds payable, 12%		700,000		700,000
Total liabilities		1,545,000		1,220,000
Stockholders' equity:
Common stock, $15 par		780,000		780,000
Retained earnings		1,185,000		793,000
Total stockholders equity		1,965,000		1,573,000
Total liabilities and stockholders' equity	$	3,510,000	$	2,793,000

Sabin Electronics
Comparative Income Statement and Reconciliation
	This Year		Last Year
Sales	$	5,450,000	$	4,620,000
Cost of goods sold		3,965,000		3,540,000
Gross margin		1,485,000		1,080,000
Selling and administrative expenses		671,000		566,000
Net operating income		814,000		514,000
Interest expense		84,000		84,000
Net income before taxes		730,000		430,000
Income taxes (30%)		219,000		129,000
Net income		511,000		301,000
Common dividends		119,000		98,000
Net income retained		392,000		203,000
Beginning retained earnings		793,000		590,000
Ending retained earnings	$	1,185,000	$	793,000

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, n/30. All sales are on account.

Req 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. (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 $340,000.) (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) e. The average sale period. (The inventory at the beginning of last year totaled $590,000.) (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) f. The operating cycle. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) g. The total asset turnover. (The total assets at the beginning of last year were $2,690,000.) (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 $1,563,000.) (Round your answers to 2 decimal places.)

		This Year		Last Year
a.	Working capital
b.	Current ratio
c.	Acid-test ratio
d.	Average collection period		days		days
e.	Average sale period		days		days
f.	Operating cycle		days		days
g.	Total asset turnover
h.	Debt-to-equity ratio
i.	Times interest earned ratio
j.	Equity multiplier