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 $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 which will be used to modernize equipment. The companys financial statements for the two most recent years follow:

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 $270,000.)

e. The average sale period. (The inventory at the beginning of last year totaled $520,000.)

f. The operating cycle.

g. The total asset turnover. (The total assets at the beginning of last year were $2,480,000.)

h. The debt-to-equity 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.)

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.

ation.com Connect Paul Sabin Organized Sabin Electronics 10 Years Chapter 15 Homework Saved Help Save & Exit Submit Check my work 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 $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 which will be used to modernize equipment. The company's financial statements for the two most recent years follow: 10 points Sabin Electronics Comparative Balance Sheet Thia Year Last Year Assets Current assetsi eBook $170,000 20,000 320,000 615,000 24,000 1,149,000 1,350,000 2,499,000 $78,000 Caah Marketable securities Accounts receivable, net Inventory Prepaid expenses 503,000 965,000 22,000 1,568,000 1,503,900 3,071,800 Print Total current asaets Plant and equipment, net Total assets Liabilities and Stockholders Equity Liabilities: References Current liabilities Bonds payable, 12% S 810,000 700,000 1,510,000 S 450,000 700,000 1,150,000 Total liabilities Stockholders' equity: Cammon stock, $15 par Retained earninga 710,000 851,800 1,561,800 3,071,800 710,000 639,000 1,349,000 2,499,000 Total stockholders equity Total liabilities and stockholders equity Sabin Electronics Comparative Income Statenent and Reconciliation This Year Last Year Sales Cost of goods sold Groas margin Selling and administrative expenses Net operating income Interest expense Net income before taxee $5,100,000 $4,410,000 3,470,000 940,000 552.000 388,000 84,000 3,895,000 1,205,000 657,000 548,000 84,000 464,000 304 000 Graw Next