Problem 14-18 Common-Size Statements and Financial Ratios for a Loan Application [LO14-1, LO14-2, [014-3, [014-4] 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 $510,000 long-term loan from Gulfport State Bank, $105,000 of which will be used to boister the Cash account and $405,000 of which will be used to modernize equipment. The company's financial statements for the two most recent years follow: During the past yeat, the company introduced soveral new product lines and raised the seling prices on a number of old product lines in order to improve its profit margin. The company also hired o new soles monagek, who has expanded sales into several new territories. Soies terms are 3/10,n/30, All sales are on account. Required: 1. To assist in approaching the bank about the loan, Poul has asked you to compute the following ratios for both this year and last year: a. The amount of working copital. b. The current rotio. c. The acid-test tatio d. The average collection period. (The accounts receivable at the beginning of last year totaled $260,000 ) e. The average sole period. (The inventary at the beginning of last year lataled $510,000 ) t. The operating cycle 9. The total asset turnover. (The total assets at the beginning of last year were $2,397,000 ) h. The debt-to-equity ratio. L. The times interest earned ratio. I The equity multiplier. (The total stockholders' equity at the beginning of last year totaled $1,317,000 ) 2. For both this year and last year a. Present the balance sheet in common-size format. b. Present the income statement in common-size format down throuah net income. 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.) c. The acid-test rotio. (Round your answers to 2 decimal places,) d. The average collection period. (The accounts recelvable at the beginning of last year totaled $260,000.) (Use 365 days in a year, Round your intermediate calculations and final answers to 2 decimal place.) e. The average sale period. (The inventory at the beginning of last year totaled $510,000.) (Use 365 days in a year, Round your Intermediate calculations and final answers to 2 decimal place.) f. The operating cycle. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.) 9. The total asset tumover. (The total assets ot the beginning of last year were $2,397,000.) (Round your answers to 2 decimal places.) h. The debt-to-equity ratio. (Round your answers to 2 decimal places.) 1. The times interest earned ratio. (Round your answers to 2 decimal places:) 1. The equity muitiplier. (The total stockholders' equity at the beginning of last year totaled $1,317,000.) (Round your answers to 2 decimal places.) Present the balance sheet in common-size format. (Round your answers to 1 Complete this question by entering your answers in the tabs bel Present the income statement in common-size format down through net
