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3. The financial statements for the Bao Corporation are given below

3. The financial statements for the Bao Corporation are given below
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The financial statements for the Bao Corporation are given below: Bao Corporation Comparative Balance Sheets December 31,2012 and 2011 2012 2011 Refer to the financial data for the \\\'Corporation in Problem 14-13. You have just been hired as a loan officer at the Sussex Bank.Your \\\"supervisor has given you a file containing a request from Bao Corporation for a $30,000 five-year loan. Use the financial statements for the Bao Corporation to answer the questions that follow. Lui Chun, who just a year ago was appointed president of Bao Corporation, informs you that although the company has had some problems in the past, it is turning things around, as evidenced by the 17 percent increase in salesand the improved earnings results between last year and this year. Ms.Chun feelsthat, with her leadership and the improved technology (which will come from the equipment that the $30,000 will allow the company to purchase),profits will be even stronger in the future. Wanting to succeed in your first assignment, you decide to gather all the necessary information for a complete analysis.You determine that the following ratios are typical for the industry in which Bao Corporation operates: 554 Current ratio Acid-test (quick) ratio Accounts receivable turnover Inventory turnover Return on assets Debt-to-equity ratio Times interest earned 2.6 to 1 1.2 to 1 8.5 times 6.2 times 12.1% 0.68 to 1 6.8 Required a. Compute each of the above ratios for Bao Corporation. b. Summarize the results of these ratios. c. Based on this analysis,would you recommend that the loan be approved? NOTE: This question is NOT our property; we are only suggesting solution of this question.

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