Debt analysis Springfield Bank is evaluating Creek Enterprises, which has requested a $3,590,000 loan, to assess the firm's financial leverage and financial risk. On the basis of the debt ratios for Creek, along with the industry averages and Creek's recent financial statements, evaluate and recommend appropriate action on the loan request. Industry averages Creek Enterprises Income Statement: Debt ratio 0.44 Times interest earned ratio 7.22 Creek Enterprises Balance Sheet: Fixed-payment coverage ratio 1.99 Creek Enterprises's debt ratio is .71. (Round to two decimal places.) Creek Enterprises's times interest earned ratio is 2.9. (Round to two decimal places.) Creek Enterprises's fixed-payment coverage ratio is 1.33. (Round to two decimal places.) Complete the following summary of ratios and compare Creek Enterprises's ratios vs. the industry average: (Round to two decimal places.) Debt ratio Times interest earned ratio Fixed-payment coverage ratio Creek Industry 0.44 7.22 1.99 (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Creek Enterprises Income Statement for the Year Ended December 31, 2019 $29,983,000 Sales revenue Less: Cost of goods sold 21,023,000 Gross profits $8,960,000 Less: Operating expenses Selling expense $3,008,000 General and administrative expenses 1,778,000 Lease expense 226,000 Depreciation expense 969,000 Total operating expense 5,981,000 $2,979,000 Operating profits Less: Interest expense Net profits before taxes Less: Taxes (rate = 21%) Net profits after taxes Less: Preferred stock dividends Earnings available for common stockholders 1,024,000 $1,955,000 410,550 $1,544,450 96,000 $1,448,450 (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Creek Enterprises Balance Sheet December 31, 2019 Assets Liabilities and Stockholders' Cash Current assets Marketable securities Current liabilities $980,000 Accounts payable 2,965,000 Notes payable Accounts receivable 11,973,000 Accruals Inventories 7,538,000 Total current liabilities Total current assets $23,456,000 Gross fixed assets (at cost)* Land and buildings $11,043,000 Machinery and equipment 20,494,000 Furniture and fixtures 7,970,000 Gross fixed assets $39,507,000 Less: Accumulated depreciation 13,010,000 Long-term debt (includes financial leases)** Stockholders' equity Preferred stock (24,000 shares, $4.00 dividend) Common stock (1.05 million shares at $5.50 par) Paid-in capital in excess of par value Retained earnings Net fixed assets $26,497,000 Total stockholders' equity Total liabilities and Total assets $49,953,000 stockholders' equity *The firm has a 4-year financial lease requiring annual beginning-of-year payments of $226,0 years of the lease have yet to run. **Required annual principal payments are $823,000. ce Sheet December 31, 2019 Liabilities and Stockholders' Equity Current liabilities Accounts payable $8,010,000 Notes payable 7,973,000 Accruals 469,000 Total current liabilities $16,452,000 Long-term debt (includes financial leases)** $19,258,000 Stockholders' equity Preferred stock (24,000 shares, $4.00 dividend) $2,501,000 Common stock (1.05 million shares at $5.50 par) 5,775,000 Paid-in capital in excess of par value 4,016,000 Retained earnings 1,951,000 Total stockholders' equity $14,243,000 Total liabilities and stockholders' equity $49,953,000 ual beginning-of-year payments of $226,000. Three .