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 $680,000 long-term loan from Gulfport State Bank, $190,000 of which will be used to bolster the Cash account and $490,000 of which will be used to modernize equipment. The company's financial statements for the two most recent years follow: Sabin Blectronics Comparative Balance Sheet Current assets 135,000 O 711,000 1,125,000 138,000 2,009,000 2,245,000 4,254,000 330,000 15,000 480,000 775,000 140,000 1,640,000 1,550,000 $ 3,190,000 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, 128 Total liabilities Stockholders' equity! Common stock, $15 par Retained earnings Total stockholders' equity Total liabilities and stockholder 850,000 800.000 ,650,000 400,000 800,000 1,200,000 870,000 234,000 2.604,000 111 ,254,000 870,000 1,120,000 1,990,000 $ 3,190,000 Common stock, $15 par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 870,000 1,734,000 2,604,000 $ 4,254,000 870,000 1,120,000 1,990,000 $ 3,190,000 Sabin Electronics Comparative Income Statement and Reconciliation This Year Last Year Sales $ 5,900,000 $4,890,000 Cost of goods sold 4,055,000 3,630,000 Gross margin 1,845,000 1,260,000 Selling and administrative expenses 689,000 584,000 Net operating income 1,156,000 676,000 Interest expense 96,000 96,000 Net income before taxes 1,060,000 580,000 Income taxes (308) 318,000 174,000 Net income 742,000 406,000 Common dividends 128000 Net income retained 614,000 299,000 Beginning retained earnings 1,120,000 821,000 Ending retained earnings $ 1,734,000 $ 1,120,000 107.000 During the past year, the company introduced several new product lines and raised the selling price in order to improve its profit margin. The company also hired a new sales manager, who has expand territories. Sales terms are 3/10,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 rati Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Present the income statement in common-size format down through net income. (Round your answers to 1 decimal place.) 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