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 $700,000 long-term loan from Gulfport State Bank, $200,000 of which will be used to bolster the Cash account and $500,000 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 $ 150,000 737,000 1,145,000 38,000 2,070,000 2,300,800 $ 4,370,800 $ 350,000 17,000 500,000 795,000 42,000 1,704,000 1,530,000 $ 3, 234,000 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 Liabilities: Current liabilities Bonds payable, 12% Total liabilities Stockholders' equity: Common stock, $20 par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ $ 900,000 900,000 1,800,000 420,000 900,000 1,320,000 890,000 1,680,800 2,570, 800 $ 4,370,800 890,000 1,024,000 1,914,000 $ 3,234,000 Sabin Electronics Comparative Income Statement and Reconciliation This Year $ 6,000,000 Sales Last Year $4,950,000

Answer 1

1.
a. Earning per share = Net Income / Common Stock Outstanding
This Year = 786800 / 44500 = $17.68 per share
Last Year = 422800 / 44500 = $9.50 per share
Common Stock outstanding = $890000 / 20 = 44500

b. Dividend Yield Ratio = Dividend per share / Market price x 100
This Year = $2.92 / 60 x 100 = 4.87%
Dividend per share = $130000/44500 = $2.92 per share
Last Year = $2.45 / 50 x 100 = 4.90%
Dividend per share = $109000/44500 = $2.45 per share

c. Dividend Payout ratio = Dividend / Net Income x 100
This Year = $130000 / 786800 = 16.52%
Last Year = $109000 / 422800 = 25.78%

d. Price Earning Ratio = Market price / EPS
This Year = $60 / 17.68 = 3.39 times
Last Year = $50 / 9.50 = 5.26 times

e. Book Value per share = Total Stockholder's Equity / Common Stock Outstanding
This Year = $2570800/44500 = $57.77 per share
Last Year = $1914000/44500 = $43.01 per share

As per HOMEWORKLIB RULES, we are supposed to answer 4 sub parts, i have done 5, so kindly post other part separately