Problem 14-18 (Algo) Common-Size Statements and Financial Ratios for a Loan Application [LO14-1, LO14-2, LO14-3, LO14-4] 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: Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets Sabin Electronics Comparative Balance Sheet This Year Last Year $ 135,000 0 $ 330,000 15,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 12% Total liabilities Stockholders' equity: Common stock, $15 par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 711,000 1,125,000 38,000 2,009,000 2,245,000 $ 4,254,000 $ 850,000 800,000 1,650,000 870,000 1,734,000 2,604,000 $ 4,254,000 480,000 775,000 40,000 1,640,000 1,550,000 $ 3,190,000 $ 400,000 800,000 1,200,000 870,000 1,120,000 1,990,000 $ 3,190,000