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

Question

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 $650,000 long-term loan from Gulfport State Bank, $175,000 of which will be used to bolster the Cash account and $475,000 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: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses $ 130,000 $300,000 12,000 450,000 745,000 37,000 672,000 1,095,000 34,000 Total current assets Plant and equipment, net 1,931,000 2,099,400 1,544,000 1,520,000 Total assets $4,030,400 S 3,064,000 Liabilities and Stockholders Equity Liabilities Current liabilities Bonds payable, 12% $ 875,000 $450,000 750,000 750,000 Total liabilities 1,625,000 1,200,000 Stockholders' equity: Common stock, $15 par Retained eamings 840,000 1,565,400 840,000 1,024,000 1,864,000 $4,030,400 S 3,064,000 Total stockholders' equity 2,405,400 Total liabilities and equity

Explanation / Answer

This year Last year Net Income/No. of shares 43.0 33.3 Shareholder equity/Total outstnadung shares 2405400/56000 1864000/56000 No. of shares outstandi ng 56000 840000/15 If any doubt plaese comment

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