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 $600,000 long-term loan from Gulfport State Bank, $150,000 of which will be used to bolster the Cash account and $450,000 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	$	110,000	$	250,000
Marketable securities		0		28,000
Accounts receivable, net		607,000		400,000
Inventory		1,045,000		695,000
Prepaid expenses		30,000		32,000
Total current assets		1,792,000		1,405,000
Plant and equipment, net		1,946,400		1,470,000
Total assets	$	3,738,400	$	2,875,000
Liabilities and Stockholders Equity
Liabilities:
Current liabilities	$	850,000	$	400,000
Bonds payable, 12%		750,000		750,000
Total liabilities		1,600,000		1,150,000
Stockholders' equity:
Common stock, $15 par		990,000		990,000
Retained earnings		1,148,400		735,000
Total stockholders equity		2,138,400		1,725,000
Total liabilities and equity	$	3,738,400	$	2,875,000

Sabin Electronics
Comparative Income Statement and Reconciliation
	This Year		Last Year
Sales	$	5,500,000	$	4,650,000
Cost of goods sold		3,975,000		3,550,000
Gross margin		1,525,000		1,100,000
Selling and administrative expenses		673,000		568,000
Net operating income		852,000		532,000
Interest expense		90,000		90,000
Net income before taxes		762,000		442,000
Income taxes (30%)		228,600		132,600
Net income		533,400		309,400
Common dividends		120,000		99,000
Net income retained		413,400		210,400
Beginning retained earnings		735,000		524,600
Ending retained earnings	$	1,148,400	$	735,000

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:

The average sale period. (The inventory at the beginning of last year totaled $600,000.) (Round your intermediate calculations and final answers to 1 decimal place. Use 365 days in a year.)

	This year	Last Year
average sale period

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

	this year	Last year
operating cycle

g.

The total asset turnover. (The total assets at the beginning of last year were $2,790,000.) (Round your answers to 2 decimal places.)

	This year	Last year
total asset turnover

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

	This year	Last year
debt-to-equity ratio

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

	this year	last year
time interest earned ratio

j.	The equity multiplier. (The total stockholders equity at the beginning of last year totaled $1,715,000.) (Round your answers to 2 decimal places.)

	this year	last year
Eauity multiplier

2. For both this year and last year: a. Present the balance sheet in common-size format. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) Sabin Electronics Common-Size Balance Sheets This Year Last Year Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses 00 00 Total current assets Plant and equipment, net 0.0 0.0 Total assets Liabilities and Stockholders' Equity Liabilities Current liabilities Bonds payable, 12% Total liabilities 0.0 0.0 Stockholders' equity: Common stock, $15 par Retained earnings Total stockholders' equity 0.0 0.0 Total liabilities and equity 0.0 0.0