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 $560.000 long-term loan from Gulfport State Bank. $130,000 of which will be used to bolster the Cash account and $430,000 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 $ 94.ee 555,600 1,005,eee 26.ece 1,680,eee 1.665,460 $ 3,345,480 $ 210,eee 24.ee 360.eee 655, eee 28,eee 1,277,600 1.430,eee $ 2,707,eee Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets Liabilities and Stockholders Equity Liabilities: Current liabilities Bonds payable, 12% Total liabilities Stockholders' equity: Connon stock, $15 par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ $ 830,eee 900,800 1.738.600 490,eee 900,00 1,390, eee 750,eee 865,400 1,615,480 $ 3,345, 460 750,000 567.eee 1,317.ee $ 2,707,eee Sabin Electronics Comparative Income Statement and Reconciliation This Year Sales $ 5,300,000 Cost of goods sold 3,935, eee Gross margin 1,365,000 Selling and administrative expenses 665.ee Net operating income 700.000 Interest expense 1e8,eee Net income before taxes 592.800 Income taxes (38x) 177.600 Net income 414,400 Connon dividends 116,000 Net income retained 298,400 Beginning retained earnings 567.800 Ending retained earnings 865, 4ee Last Year $ 4,530,000 3,518,eee 1,628,888 560.ece 460,000 1e8,eee 352.ee 1e5,600 246,400 95,000 151,400 415, 6ee $ 567,600 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. Required: 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. e. The average sale period. (The Inventory at the beginning of last year totaled $560.000.) f. The operating cycle. g. The total asset turnover. (The total assets at the beginning of last year were $2,600.000.) h. The debt-to-equity ratio. 1. The times Interest earned ratio. J. The equity multiplier. (The total stockholders' equity at the beginning of last year totaled $1.307,000.) 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 through net Income