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 $660,000 long-term loan from Gulfport State Bank. $180,000 of which will be used to bolster the Cash account and $480,000 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 Assets This Year Last Year Current assets: Cash $ 128,000 $ 310,000 Marketable securities 0 13,000 Accounts receivable, net 685,000 460,000 Inventory 1.105,000 755.000 Prepaid expenses 34.000 38.000 Total current assets 1,952,000 1,576,000 Plant and equipment, net 2,061.000 1,450.ee Total assets $4.013,000 $ 3,026,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities 880,000 $ 460,000 Bonds payable, 12% 750,000 750,000 Total liabilities 1,630,000 1,210,000 Stockholders equity: Comon stock. $15 par 850,000 850,000 Retained earnings 1.533,000 966.000 2.383.000 Total stockholders' equity 1,816,000 Total liabilities and stockholders' equity $ 4,013,000 $ 3,026,000 $ Sabin Electronics Comparative Income Statenent and Reconciliation This Year Sales $ 5,800, eae Cost of foods sold 4,035,000 Gross margin 1,765,00 Selling and administrative expenses 685,000 Net operating income 1,080,000 Interest expense 90.000 Last Year $ 4,830,000 3,610,000 1,220,000 580,000 640,00e 90,000 Sabin Electronics Comparative Income Statement and Reconciliation This Year Sales $3,800,000 Cost of goods sold 4,035,000 Gross margin 1,765,000 Selling and administrative expenses 685.000 Net operating income 1,000,000 Interest expense 90,000 Net Income before taxes 990,000 Income taxes (30%) 297,000 Net Income 60,000 Common dividends 126,000 Net Income retained 567,000 Beginning retained earnings 966,000 Ending retained earnings $1,533,000 Last Year $ 4,830,000 3,610.000 1,220,000 500.000 640,000 90,000 550,00 165,00 185,000 105,000 250,000 686,000 966,000 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, 1/30. All sales are on account Required: 1. To assist in approaching the bank about the loan, Poul hos 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 a. The average collection period (The accounts receivable at the beginning of last year totaled $410,000) e. The average sale period. (The inventory at the beginning of last year totaled $660,000) f The debt-to-equity ratio, The times interest earned ratio 2. For both this year and last year b. Present the income statement in common-size format down through net income for both this year and last year Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Next a. ine average collecuon period. (i ne accounts receivable at the beginning or last year totalea $410,000.) e. The average sale period. (The inventory at the beginning of last year totaled $660,000.) f. The debt-to-equity ratio. g. The times interest earned ratio, 2. For both this year and last year: b. Present the income statement in common-size format down through net income for both this year and last year. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 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 $410,000.) (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 $660,000.) (Round your intermediate calculations and final answers to 2 decimal place. Use 365 days in a year.) f. The debt-to-equity ratio. (Round your answers to 2 decimal places.) 9. The times interest earned ratio. (Round your answers to 2 decimal places.) Show less This Year Last Year a. Working capital b. Current ratio c Acid-test ratio d. Average collection period e. Average sale period 1. Debt-to-equity ratio 9. Times interest earned ratio days days days days R Rega Reg 2 > Prev 12 of 12 Next > ucation.com/ext/map/index.html?con con external browser &launchurahttp%253A%252F%252Fim..meducation.com Hele aine average conection period, cine accounts receivable at the beginning of last year totaled 00) e. The average sale period. (The inventory at the beginning of last year totaled $660.000) 1. The debt-to-equity ratio 9. The times interest earned ratio. 2. For both this year and last year: b. Present the income statement in common-size format down through net income for both this year and last yeat. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Present the income statement in common-size format down through net income for both this year and last year. (Round your answers to 1 decimal place.) Last Year 0.0 Sabin Electronics Common-Size Income Statements This Year Sales Cost of goods sold Gross margin 00 Selling and administrative expenses Net operating income 0.0 Interest expense Net income before taxes 0.0 income taxes 0.01 Net income 0.0 0.0 0.01% Rega