Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several
ID: 341236 • Letter: P
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 $530,000 long-term loan from Gulfport State Bank, $115,000 of which will be used to bolster the Cash account and $415,000 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 Current assets: $ 82000 180,000 21,000 330,000 625,000 25,000 Marketable securities Accounts receivable, net 16.000 980,000 22.000 Prepaid expenses Total current assets Plant and equipment, net 1,600,000 1,570 200 1,181,000 1400,000 Total assets $3.170.200 2.581,000 Liabilities and Stockholders Equity Current labilities Bonds payable, 12% 815.000 $ 460.000 750,000 750,000 Total labities 1,565.000 1 ,210,000 Stockholders' equity Common stock, $15 par Retained earnings 720.000 885 200 720,000 651,000 ,371,000 $3,170.200 2,581,000 Total stockholders equity 1,605.200O Total labilities and equity Sabin Electronics Comparative Income Statement and Reconciliation This YearLast Year Sales Cost of goods sold $5,150,000 4440,000 3,480,000 3,905.000 Gross margin Selling and administrative expenses 1,245.000 659,000 50,000 554,000 Net operating income Interest expense 586,000 90,000 405,000 0,000 Net income before taxes Income taxes (30%) 496.000 148.800 316,000 94,800 347 200 113,000 221,200 2,000 Common dividends Net income retained Beginning retained eamings 234, 200 651,000 129,200 521,800 Ending retained earnings $ 885.200 651,000Explanation / Answer
Earning Per share This year Last year A Net Income 347200 221200 B Number of shares outstanding 48000 48000 (720000/15) C=A/B Earning per share $ 7.23 $ 4.61 This year Last year Earning per share $ 7.23 $ 4.61 Dividend Yield Ratio This year Last year A Share price $55 $50 B TotalCommon Dividend 113000 92000 C=B/48000 Dividend per share $ 2.35 $ 1.92 D=C/A Dividend Yield Ratio 0.04280303 0.03833333 This year Last year Dividend Yield Ratio 4.3% 3.8% Dividend Payout Ratio A Net Income 347200 221200 B Total Dividend 113000 92000 C=B/A Dividend payout ratio 0.32546083 0.4159132 This year Last year Dividend Payout Ratio 32.5% 41.6% Price earning Ratio A Price of share $55 $50 B Earning Per Share $ 7.23 $ 4.61 C=A/B Price earning ratio 7.60368664 10.8499096 This year Last year Price Earning ratio 7.60 10.85 Book Value per sahre of common stock A Common shares $720,000 $720,000 B Retained earning $885,200 $651,000 C=A+B Common shareholders equity $1,605,200 $1,371,000 D Number of shares outstanding 48000 48000 E=C/D Book Value per sahre of common stock $33.44 $28.56 This year Last year Book Value per sahre of common stock $33.44 $28.56