plication Assignment i Saved 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 $520,000 long-term loan from Gulfport State Bank, $110,000 of which will be used to bolster the Cash account and $410,000 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 Assets Current assets: Cash $ 78, 090 $ 170, 000 Marketable securities 20 , 000 Accounts receivable, net 503 , 000 320, 000 Inventory 965 , 000 615, 006 Prepaid expenses 22 ,000 24 , 000 Total current assets 1, 568, 000 1, 149, 090 Plant and equipment, net 1, 503, 800 1, 350, 000 Total assets $ 3, 071, 800 $ 2, 499, 000 Liabilities and Stockholders' Equity Liabilities : Current liabilities $ 810, 000 $ 450, 000 Bonds payable, 12% 700, 090 700, 000 Total liabilities 1, 510, 000 1, 150, 000 Stockholders' equity : Common stock, $ 20 par 900 'OTL 710, 000 Retained earnings 851 , 800 639,000 Total stockholders' equity 1 , 561 , 800 000' 6 DE ' T Total liabilities and stockholders' equity $ 3, 071, 800 $ 2, 499, 000 Sabin Electronics Comparative Income Statement and Reconciliation This Year Last Year Searchnit 3 App Saved 4 Comparative Income Statement and Reconciliation This Year Last Year Sales $ 5, 100, 000 $ 4, 410, 000 Cost of goods sold 3 , 895 , 060 3, 470, 000 Gross margin 1, 205 , 060 940, 000 Selling and administrative expenses 657, 006 552, 000 points Net operating income 548 , 006 388, 000 Interest expense 84 , 000 84, 000 Skipped Net income before taxes 464, 000 304, 000 Income taxes (30%) 139 , 200 91 , 200 Net income 324 , 800 212 , 806 Common dividends 112 , 090 91 , 000 eBook Net income retained 212 , 800 121, 806 Beginning retained earnings 639, 000 517, 200 References Ending retained earnings $ 851 , 800 $ 639, 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. Assume Paul Sabin has asked you to assess his company's profitability and stock market performance. Required: 1. You decide first to assess the company's stock market performance. For both this year and last year, compute: a. The earnings per share. There has been no change in common stock over the last two years. b. The dividend yield ratio. The company's stock is currently selling for $50 per share; last year it sold for $46 per share. c. The dividend payout ratio. d. The price-earnings ratio. (Assume that the industry norm for the price-earnings ratio is 10) e. The book value per share of common stock. 2. You decide next to assess the company's profitability. Compute the following for both this year and last year: a The niross marain percentage Mc Graw Hill 47' F Q Search (DELL Partly sunny2. You decide next to assess the company's profitability. Compute the following for both this year and last year: a. The gross margin percentage. b. The net profit margin percentage c. The return on total assets. (Total assets at the beginning of last year were $2,360,000.) d. The return on equity. (Stockholders' equity at the beginning of last year was $1,339,000.) e. Is the company's financial leverage positive or negative? ped Complete this question by entering your answers in the tabs below. Book Required 1 Required 2 rences You decide first to assess the company's stock market performance. For both this year and last year, compute: a. The earnings per share. There has been no change in common stock over the last two years. (Round your answers to decimal places.) b. The dividend yield ratio. The company's stock is currently selling for $50 per share; last year it sold for $46 per share. not round intermediate calculations. Round your percentage answers to 1 decimal place.) c. The dividend payout ratio. (Do not round intermediate calculations. Round your percentage answers to 1 decimal place d. The price-earnings ratio. (Assume that the industry norm for the price-earnings ratio is 10.) (Do not round intermediate calculations. Round your answers to 2 decimal places.) e. The book value per share of common stock. (Round your answers to 2 decimal places.) Show less This Year Last Year a. Earnings per share b. Dividend yield ratio % % c. Dividend payout ratio d. Price-earnings ratio Mc Graw Hill Q Searchb. The net profit margin percentage. c. The return on total assets. (Total assets at the beginning of last year were $2,360,000.) d. The return on equity. (Stockholders' equity at the beginning of last year was $1,339,000.) e. Is the company's financial leverage positive or negative? Complete this question by entering your answers in the tabs below. ped Required 1 Required 2 ook You decide first to assess the company's stock market performance. For both this year and last year, compute: rences a. The earnings per share. There has been no change in common stock over the last two years. (Round your answ decimal places.) b. The dividend yield ratio. The company's stock is currently selling for $50 per share; last year it sold for $46 per s not round intermediate calculations. Round your percentage answers to 1 decimal place.) c. The dividend payout ratio. (Do not round intermediate calculations. Round your percentage answers to 1 decimal d. The price-earnings ratio. (Assume that the industry norm for the price-earnings ratio is 10.) (Do not round intern calculations. Round your answers to 2 decimal places.) e. The book value per share of common stock. (Round your answers to 2 decimal places.) Show This Year Last Year a. Earnings per share b. Dividend yield ratio c. Dividend payout ratio d. Price-earnings ratio e. Book value per share Mc Graw Hilld. The return on equity. (Stockholders' equity at the beginning of last year was $1,339,000.) e. Is the company's financial leverage positive or negative? Complete this question by entering your answers in the tabs below. Required 1 Required 2 You decide next to assess the company's profitability. Compute the following for both this year and la a. The gross margin percentage. (Round your percentage answers to 1 decimal place.) .b. The net profit margin percentage. (Round your percentage answers to 1 decimal place.) c. The return on total assets. (Total assets at the beginning of last year were $2,360,000.) (Round yo to 1 decimal place.) d. The return on equity. (Stockholders' equity at the beginning of last year was $1,339,000.) (Round y to 1 decimal place.) e. Is the company's financial leverage positive or negative? This Year Last Year a. Gross margin percentage % b. Net profit margin percentage % c. Return on total assets d. Return on equity e. Financial Leverage of 10 Next