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 $580,000 long-term loan from Gulfport State Bank. $140,000 of which will be used to bolster the Cash account and $440,000 of which will be used to modemize equipment. The company's financial statements for the two most recent years follow This Year Last Year $ 180,000 Sabin Electronics Comparative Balance Sheet Assets Current assets: Cash Marketable Securities Accounts receivable, net Inventory Prepaid expenses Total current assets plant and equipment, net Total assets Llabilities and Stockholders Equity Libilities: Current liabilities Sonds payable, 12% Total abilities Stockholders' equity Conon stock, 515 par Stained earnings Total stockholders' equity Total libilities and stockholders equity 581,000 1,025,000 26.000 1,732.ee 1,752,600 $ 3,491,600 230,000 26,000 350,000 675,000 30,000 1,341,000 1,450.00 $ 2,791,000 5 5 840,000 650.000 1.490,000 519,000 650,000 1.160, 770,000 1,231, 6e , 2,001,600 $ 3,491,600 770,000 361 000 1.631,000 $ 2,791,000 Sobin Electronics Comparative Income Statement and Reconciliation This Year Sales $ 5,400,000 Cost of goods sold 3,955.000 Gross wangin 1,445,000 Selling and ministrative expenses 665,000 Det operating income 776,000 Interest expense 20. Net Inco before taxes 598,000 Income tax (30) 209,400 that income 483,600 Condividends 110.000 et Income retained 378,500 Desinning retained earnings 361.00 de retained carings $ 1.251.600 Last Year $ 4,590,000 330,000 1,060,000 566,000 496.000 78.000 418,000 125.400 292.600 97.00 195.600 665.400 5 361,000 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 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. a. The amount of working capital b. The current ratio The acid-test ratio. d. The average collection period (The accounts receivable at the beginning of last year totaled $330,000.) e The average sale period. (The inventory at the beginning of last year totaled $580,000) 1. The operating cycle 9 The total asset turnover (The total assets at the beginning of last year were $2,660,000) h The debt to equity ratio The times interest earned ratio J. The equity multiplier (The total stockholders' equity at the beginning of last year totoled $1,621000) 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 Reg 1 Reg 2A Reg 28 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.) 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 $330,000.) (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 $580,000.) (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.) 9. The total asset turnover. (The total assets at the beginning of last year were $2,660,000.) (Round your answers to 2 decimal places.) h. The debt-to-equity ratio. (Round your answers to 2 decimal places.) 1. The times interest earned ratio. (Round your answers to 2 decimal places.) 1. The equity multiplier. (The total stockholders' equity at the beginning of last year totaled $1,621,000.) (Round your answers to 2 decimal places.) Show less This Year Last Year days a Working capital b. Current ratio c Acid-test ratio d Average collection period e. Average sale period 1 Operating cycle 9 Total asset turnover h Debt-to-equity ratio Times interest eamed ratio Equity multiplier days days days days days Ren Req2A > Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Reg 2B Present the balance sheet in common-size format. (Round your answers to 1 decimal place.) Sabin Electronics Common-Size Balance Sheets This Year Last Year Assets Current assets 96 % Cash Marketable securities Accounts receivable net Inventory Prepaid expenses Total current assets Plant and equipment net Total assets Liabilities and Stockholders' Equity Liabilities Current liabilities Bonds payable, 12% Total liabilities Stockholders' equity Common stock, $15 par Retained earnings Total stockholders' equity Total liabilities and equity % % Reg 1 Req 2A Req 28 Present the income statement in common-size format down through net income. (Round your answers to 1 decimal place.) es Last Year Sabin Electronics Common Size Income Statements This Year Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net Income before taxes Income taxes Net Income