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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

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 $620,000 long-term loan from Gulfport State Bank, $160,000 of which will be used to bolster the Cash account and $460,000 of which will be used to modernize equipment. The companys financial statements for the two most recent years follow:

Sabin Electronics
Comparative Balance Sheet
This Year Last Year
Assets
Current assets:
Cash $ 118,000 $ 270,000
Marketable securities 0 30,000
Accounts receivable, net 633,000 420,000
Inventory 1,065,000 715,000
Prepaid expenses 30,000 34,000
Total current assets 1,846,000 1,469,000
Plant and equipment, net 1,969,200 1,490,000
Total assets $ 3,815,200 $ 2,959,000
Liabilities and Stockholders Equity
Liabilities:
Current liabilities $ 820,000 $ 420,000
Bonds payable, 12% 850,000 850,000
Total liabilities 1,670,000 1,270,000
Stockholders' equity:
Common stock, $15 par 630,000 630,000
Retained earnings 1,515,200 1,059,000
Total stockholders equity 2,145,200 1,689,000
Total liabilities and equity $ 3,815,200 $ 2,959,000
Sabin Electronics
Comparative Income Statement and Reconciliation
This Year Last Year
Sales $ 5,600,000 $ 4,710,000
Cost of goods sold 3,995,000 3,570,000
Gross margin 1,605,000 1,140,000
Selling and administrative expenses 677,000 572,000
Net operating income 928,000 568,000
Interest expense 102,000 102,000
Net income before taxes 826,000 466,000
Income taxes (30%) 247,800 139,800
Net income 578,200 326,200
Common dividends 122,000 101,000
Net income retained 456,200 225,200
Beginning retained earnings 1,059,000 833,800
Ending retained earnings $ 1,515,200 $ 1,059,000

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.

e. The average sale period. (The inventory at the beginning of last year totaled $620,000.)(Round your intermediate calculations and final answers to 1 decimal place. Use 365 days in a year.)

f. The operating cycle. (Round your intermediate calculations and final answer to 1 decimal place.)

g.

The total asset turnover. (The total assets at the beginning of last year were $2,919,000.) (Round your answers to 2 decimal places.)

h. The debt-to-equity ratio. (Round your answers to 3 decimal places.)

i. The times interest earned ratio. (Round your answers to 1 decimal place.)

j. The equity multiplier. (The total stockholders equity at the beginning of last year totaled $1,679,000.) (Round your answers to 2 decimal places.)

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