The chief executive officer of Ginny's Fashions has included the following financial statements in a loan application submitted to Priority Bank. The company intends to acquire additional equipment and wishes to finance the purchase with a long-term note.
Assume that you, a bank loan officer, review the financial statements, and recommend whether Ginny's Fashions should be considered for a loan. Support your recommendation with financial ratios. Assume a tax rate of 30 percent. Interest expense is $2,000 in 2012 and $2,000 in2011.