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Paul Sabin organized Sabin Electronics $10$ years ago to produce and sell several

electronic devices. Due to cash shortage, the company is requesting a $$500,000$ long$-$term from

Gulfport State Bank. The company's financial statements for the two most recent years follow: During the past year, the company introduced several new products and raised the selling

prices on a number of existing products to improve its profit margin. The company also hired a

new sales manager, who expanded sales into several new territories. Sales terms are $2/10,\frac{n}{30}.$

All sales are on account.

to assist in approaching the bank about the loan, Paul asked you to compute the following

ratios for both this year and last year"

a$.$ The amount of working capital

b$.$ The current ratio

c$.$ The acid$-$test ratio

d$.$ The average collection period. $($The accounts receivable at the beginning of last year totaled

$$250,000.)$

e$.$ The average sale period. $($The inventory at the beginning of last year totaled $$500,000.)$

f$.$ The operating cycle.

g$.$ The total asset turnover. $($The total assets at the beginning of last year were $$2,420,000.)$

h$.$ The debt$-$to$-$equity ratio.

i$.$ The times interest earned ratio.

j$.$ The equity multiplier. $($The total stockerholders' equity at the beginning of last year totaled

$$1,420,000.)$ a$.$ Present the balance sheet in common$-$size format.

b$.$ Present the income statement in common$-$size format down through net income.

Paul Sabin also gathered the following financial data and ratios typical of companies in

the electronics industry:

Comment on the results of your analysis in $(1)$ and $(2)$ above and compare. Sabin

Electronics' performance to the benchmarks from the electronics industry. Do you think

the company will get its loan application approved?

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