Question

Paul Sabin organized Sabin Electronics 10 years ago to produceand sell several electronic devices on which he had securedpatents. Although the company has been fairly profitable, it is nowexperiencing a severe cash shortage. For this reason, it isrequesting a $620,000 long-term loan from Gulfport State Bank,$160,000 of which will be used to bolster the Cash account and$460,000 of which will be used to modernize equipment. Thecompany’s financial statements for the two most recent yearsfollow:

Sabin Electronics
Comparative Balance Sheet
	This Year		Last Year
Assets
Current assets:
Cash	$	118,000	$	270,000
Marketable securities		0		30,000
Accounts receivable, net		633,000		420,000
Inventory		1,065,000		715,000
Prepaidexpenses		30,000		34,000
Total currentassets		1,846,000		1,469,000
Plant and equipment,net		1,969,200		1,490,000
Total assets	$	3,815,200	$	2,959,000
Liabilitiesand Stockholders Equity
Liabilities:
Currentliabilities	$	820,000	$	420,000
Bondspayable, 12%		850,000		850,000
Totalliabilities		1,670,000		1,270,000
Stockholders'equity:
Commonstock, $15 par		630,000		630,000
Retained earnings		1,515,200		1,059,000
Total stockholders’equity		2,145,200		1,689,000
Total liabilitiesand equity	$	3,815,200	$	2,959,000

Sabin Electronics
Comparative Income Statement and Reconciliation
	This Year		Last Year
Sales	$	5,600,000	$	4,710,000
Cost of goodssold		3,995,000		3,570,000
Gross margin		1,605,000		1,140,000
Selling andadministrative expenses		677,000		572,000
Net operatingincome		928,000		568,000
Interestexpense		102,000		102,000
Net income beforetaxes		826,000		466,000
Income taxes(30%)		247,800		139,800
Net income		578,200		326,200
Commondividends		122,000		101,000
Net incomeretained		456,200		225,200
Beginning retainedearnings		1,059,000		833,800
Ending retainedearnings	$	1,515,200	$	1,059,000

During the past year, the companyintroduced several new product lines and raised the selling priceson a number of old product lines in order to improve its profitmargin. The company also hired a new sales manager, who hasexpanded sales into several new territories. Sales terms are 2/10,n/30. All sales are on account.

e.	The average sale period. (Theinventory at the beginning of last year totaled$620,000.)(Round your intermediate calculations and finalanswers to 1 decimal place. Use 365 days in a year.)

f.	The operating cycle.(Round your intermediate calculations and final answer to 1decimal place.)

g.	The total asset turnover. (The total assets at the beginning oflast year were $2,919,000.) (Round your answers to 2decimal places.)

h.	The debt-to-equity ratio.(Round your answers to 3 decimal places.)

i.	The times interest earned ratio.(Round your answers to 1 decimal place.)

j.	The equity multiplier. (Thetotal stockholders’ equity at the beginning of last year totaled$1,679,000.) (Round your answers to 2 decimalplaces.)