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 $630,000 long-term loan from Gulfport State Bank, $165,000 of which will be used to bolster the Cash account and $465,000 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 Assets Current assets: Cash $ 119,000 $ 280,000 Marketable securities 0 10,000 accounts receivable, net 640,000 430,000 Inventory 1,075,000 725,000 Prepaid expenses 30,000 25,000 Total current assets 1,864,000 1,480,000 Plant and equipment, net 1,933,600 1,460,000 Total assets $ 3,797,600 $ 2,940,000 Liabilities and Stockholders Equity Liabilities: Current liabilities $ 810,000 $ 430,000 900,000 900,000 Bonds payable, 12% Total liabilities 1.710,000 1,330,000 Stockholders' equity: Common stock, $15 par 820,000 820.000 Retained earnings 1,267,600 790,000 Total stockholders' equity 2,087, 600 1,610,000 Total liabilities and stockholders' equity $ 3.797.600 $ 2,940,000 Sabin Electronics Comparative Income Statement and Reconciliation This Year Sales $ 5,650,000 Cost of goods sold 4,005,000 Gross margin 1,645,000 Selling and administrative expenses 679,000 Net operating income 966,000 Interest expense 100,000 Net income before taxes 858,000 Income taxes (203) 257,400 Net income 600, 600 Common dividends 123,000 Net income retained 477,600 790,000 Beginning retained earnings $ 1,267,600 Ending retained earnings Last Year $ 4,740,000 3,580,000 1,160,000 574,000 586,000 100,000 478,000 143,400 334,600 102,000 232, 600 597, 400 790,000 $ 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. Reg 1 Reg 2A Req 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.) 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 $380,000.) (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 $630,000.) (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 $2,900,000.) (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 $1,600,000.) (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 Operating cycle 9. Total asset turnover h. Debt-to-equity ratio 1. Times interest earned ratio Equity multiplier days days days days days 5 points Present the balance sheet in common-size format. (Round your answers to 1 decimal place.) Last Year eBook Print % % References Sabin Electronics Common-Size Balance Sheets This Year Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets 0.0 Plant and equipment, net Total assets 0.0% Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 12% 0.0 Total liabilities Stockholders' equity: Common stook. $15 par Retained earnings 0.0 Total stockholders equity 0.0% Total liabilities and equity 0.01% 0.0 0.0 0.0% Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Req 2B Present the income statement in common-size format down through net income. (Round your answers to 1 decimal place.) Sabin Electronics Common-Size Income Statements This Year Last Year % 70 0.0 0.0 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes Net income 0.0 0.0 0.0 0.0 0.01% 0.0%