As an analyst for Royal Bank, it is your job to write recommendations to the bank's loan committee. Vernon Engineering Co., a client of the bank, has submitted these summary data to support the company's request for a $150,000 loan:

Required
Analyze these financial statement data to decide whether the bank should lend $150,000 to Vernon Engineering Co. Consider the trends in net income and owner's equity, and the change in total liabilities in making your decision. Write a one paragraph recommendation to the bank's loan committee.

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Income Statement Total revenues 2014 $550,000 400,000 2013 2012 Data $490,000 345,000 $475,000 305,000 Total expenses Net income $150,000 $145,000 $170,000 Statement of Owner's Equity Data Beginning capital Add: Net income 2014 2013 2012 $230,000 150,000 $205,000 145,000 $215,000 170,000 $380,000 $350,000 (120,000) $385,000 (180,000) Less: Withdrawals Ending capital (175,000) $205,000 $230,000 $205,000