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 2017 and $2,000 in 2016.

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2017 2016 Balance Sheet $21,000 $14,000 Current assets Long-term assets 52,000 50,000 Current liabilities 9,000 7,000 Long-term liabilities 24,000 26,000 Common stock 25,000 25,000 Retained earnings 15,000 6,000 Income Statement $74,000 $70,000 Revenues Expenses 56,000 53,000 Statement of Cash Flows $ 9,000 $15,000 Net cash from operating activities Net cash from investing activities (12,000) (14,000) Net cash from financing activities 5,000 7,000 $ 2,000 $ 8,000 Change in cash balance Beginning cash balance 9,000 1,000 $ 9,000 $11,000 Ending cash balance