Background info for this question- The chief executive officer of Ginny's Fashion 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 recommendations with financial ratios. Assume a tax rate of 30%. Interest expense is $2,000 in 2012 and $2,000 in 2011.

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2011 2012 Balance Sheet Current Assets Long-term assets Current Liabilities Long-term liabilities Contributed Capital Retained Earnings 21,000 S 14,000 52,000 S 50,000 7,000 9,000 S 24,000 S 25,000 S 15,000 S 26,000 26,000 6,000 Income Statement Revenues Expenses 74,000 S 70,000 53,000 56,000 S Statement of Cash Flows Net cash from operating activities Net cash from investing activities Net cash from financing activities Change in cash balance Beginning cash balance Ending Cash Balance 9,000 S 15,000 (12,000) S 5,000 S 2,000 S 9,000 S 11,000 S (14,000) 7,000 8,000 1,000 9,000