Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on which he had secured patent Although the company has been fairly profitable, it is now experiencing a severe cash shortage. For this reason, it is requesting a $520,000 long-term loan from Gulfport State Bank, $110,000 of which will be used to bolster the Cash account and $410,000 of whi 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 78,000 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: S03.000 965,000 22.000 1,568,000 1,503, 800 $ 3,071, 800 $ 170.000 20,000 320,000 615,000 24,000 1,149,000 1,350,000 $2,499,000 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 Isabilities: Current liabilities Bonds payable, 12% Total liabilities Stockholders' equity: Common stock, $15 par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ $ 810.000 700,000 1,510,000 450.000 700,000 1,150,000 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.) g. 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 710,000 851.800 1,561, 800 $ 3,071,800 1 710,000 639,000 , 349,000 $ 2,499,000 This Year Last Year Sabin Electronics Comparative Income Statement and Reconciliation This Year Last Year Sales $ 5,100,000 $4,410,000 Cost of goods sold 3,895,000 3,470,000 Gross margin 1, 205,000 940,000 Selling and administrative expenses 657,000 552,000 Net operating income 548.000 388,000 Interest expense 84,000 84.000 Net income before taxes 464,000 304.000 Income taxes (30%) 139,200 91,200 Net income 324,800 212,800 Common dividends 112,000 91.000 Net income retained 212, 800 121,800 Beginning retained earnings 639,000 517,200 Ending retained earnings $ 851,800 $ 639,000 days days a. Working capital b. Current ratio c. Acid-test ratio d. Average collection period e. Average sale period f. Operating cycle 9. Total asset turnover h Debt-to-equity ratio i. Times interest earned ratio j. Equity multiplier days days days days
