Problem 15-19 Financial Ratios for Assessing Profitability and Market Performance [L015-5, LO15-6] 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 $670,000 long-term loan from Gulfport State Bank, $185,000 of which will be used to bolster the Cash account and $485,000 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: $ 320,000 14,000 470,000 765,000 39,000 1,608,000 1,380,000 S 2,988,000 $ 133,000 Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses 698,000 1,115,000 34,000 1,980,000 2,015,600 $ 3,995,600 Total current assets Plant and equipment, net Total assets Liabilities and Stockholders Equity Liabilities: Current liabilities Bonds payable, 12% $ 885,000 750,000 1,635,000 $470,000 750,000 1,220,000 Total liabilities Stockholders' equity: 860,000 1,500,600 2,360,600 $ 3,995,600 Common stock, $20 par Retained earnings Total stockholders' equity Total liabilities and equity 860,000 908,000 1,768,000 $ 2,988,000