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 $690,000 long-term loan from Gulfport State Bank $195,000 of which will be used to bolster the Cash account and $495,000 of which will be used to modernize equipment. The company's financial statements for the two most recent years follow. Sabin Electronica comparative Balance Sheet This Year Last Year Assets Current asset Cach $ 146,000 $ 340,000 Marketable securities 0 26,000 Accounts receivable, net 724,000 490,000 Inventory 1,135,000 785,000 Prepaid expenses 38,000 41.000 Total current assets 2,043,000 1.672,000 Plant and equipment, net 2,229,400 1,480.000 Total assets 54,272,400 3,152,000 Liabilities and stockholders Equity Liabilities: Current ilities 195,000 $ 410,000 Bonds payable, 125 850,000 850,000 Total Liabilities 1.245.000 1.260.000 Stockholders equity Comon stock, $15 par $80,000 Tetained earnings 380,000 1.647,400 1,012.000 Total stockholders' equity 2,527,400 1.892,000 Total abilities and stockholders' equlty $4,272,400 $3,152,000 Sabin Electronice Comparative Income statement and Reconciliation Sales Coat of goods sold Gross margin Selling and administrative expenses Het operating income Interest expense Net Income before taxes Income taxes (301) Het income Common dividende Net Income retained Beginning retained earnings Inding retained earningo This YOR Last Year $5.950,000 $4.920,000 4.065.000 3,640,000 1,309,000 1,200,000 691.000 586.000 1,194,000 694,000 102.000 102,000 1.092,000 592,000 321.600 172.600 764,400 414,400 129.000 100,000 635,400 306,400 1,012.000 205600 $1,647,400 $1,012,000 During the past year, the company introduced several 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 a new sales manager, who has expanded sales into several new territories. Sales terms are 2/0,1V30. 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: 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 $440,000.) e. The average sale period. (The inventory at the beginning of last year totaled $690,000.) 1 The operating cycle. g. The total asset turnover . (The total assets at the beginning of last year were $3,112,000.) h. The debt-to-equity ratio. The times interest earned ratio. J. The equity multiplier (The total stockholders' equity at the beginning of last year totaled S1,882,000.) 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. Complete this question by entering your answers in the below. Reg 1 Reg 2A Reg 28 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.) The acid-test ratio. (Round your answers to 2 decimal places.) d. The average collection period. (The accounts receivable at the beginning of last year totaled $440,000.) (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 $690,000.) (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 turnover (The total assets at the beginning of last year were $3,112,000.) (Round your answers to 2 decimal places.) h. The debt-to-equity ratio. (Round your answers to 2 decimal places) I. The times interest earned ratio. (Round your answers to 2 decimal places.) 1. The equity multiplier. (The total stockholders' equity at the beginning of last year totaled $1,882,000.) (Round your answers to 2 decimal places Show less This Year Last Year a Working capital b. Current ratio c. Acid-test ratio d. Average collection period c. Average sale period Operating cycle Totalte mover h Debt-to-equity ratio Times interest earned to Equity multiplier days days days days days dayo Reg 1 Req 2A Req 2B Present the balance sheet in common-size format. (Round your answers to 1 decimal place.) Sabin Electronics Common-Size Balance Sheets This Year Last Year 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 Uabilities: Current liabilities Bonds payable, 12% Total liabilities Stockholders' equity: Common stock, $15 par Retained earings Total stockholders' equity Total liabilities and equity Complete this question by entering your answers in the tabs below. Req1 Req 2A Reg 28 Present the income statement in common-size format down through net income. (Round your answers to 1 decimal place.) Sabin Electronics Common-Size Income Statements This Year Last Year Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net Income before taxes Income taxes Net Income