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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 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 This Year Last Year Current assets: 128,000 310,000 13,000 460,000 755,000 38,000 Marketable securities 685,000 1,105,000 34,000 Accounts receivable, net Prepaid expenses Plant and equipment, net Total assets Llabilities and Stockholders Equity 952,000 1,576,000 2,061,000 1,450,000 Total ourrent assets $4,013,000 026,000 Liablities Current liablities Bonds payable, 12% 880,000 460,000 750,000 Total liablities ,630,000 1,210,000 Common stock, $15 par Retained earnings 750,000 750,000 ,633,0001,068,000 2,383,000 1,816.000 4,013,000 $ 3,026,000 Total stockholders equity Total iablities and equity Sabin Electronics Comparative Income Statement and This Year Last Year Cost of goods sold Gross margn Net operating income $5,800,000 $4,830,000 035,0003,610.000 765.000 ,220,000 665.000 580,000 840.000 Interest expense 90,000 MacBo 2 3 4 5 6 tab Comparative Income Statement and Reconciliation This Year Last Year $5,800,000 4,830,000 4,035,000 3,610,000 Cost of goods sold Gross margin 1,765,000 1,220,000 Selling and administrative expenses 685,000 580,000 1,080,000 90,000 Net operating income 640,000 90,000 Interest expense Net income before taxes Income taxes (30%) Net income 550,000 990,000 297,000 165,000 693,000 126,000 385,000 105,000 Common dividends Net income retained Beginning retained eamings 567,000 1,066,000 280,000 786,000 Ending retained earnings 1,633,000 $1,066,000 During the past year, the company introduced several new product lines and a number of old product lines in order to improve its proft margin. The company also hired a new manager, who has expanded sales into several new ternitories Sales terms are 3/10, n/30. All sales are on raised the selling prices on 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 a. The amount of working capital. b. The current ratio (Round your answers to 2 decimal places.) MacBook Pro 2 3 4 5 6 . The acid-Aest ratio. (Round your answers to 2 decimal places.) Acid-test ratio 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 1 decimal place. Use 365 days in a year.) verage collection period e. The average sale period. (The inventory at the beginning of last year totaled $660,000) (Round your intermediate caleulations and final answers to 1 decimal place. Use 365 days in a year) Average sale period t The operating cycle. (Round your place.) intermediate calculations and final answer to 1 decimal 2 3 4 5 j g. The total asset tunover. (The total assets at the beginning of last year were $2,986,000.) (Round your answers to 2 decimal places.) This Year Last Total asset turnover h The debt-to-equity ratio. (Round your answers to 3 decimal places) Debi-to-equity ratio L The times interest eamed ratio. (Round your answers to 1 decimal place.) Times interest eamed ratio The equity mutiplier. (The total stockholders' equity at the beginning of last year totaled $1,806.000.) Round your answers to 2 decimal places) Equity multiplier MacBook Pro 2 3 4 5 6 ck
