Pedabo Invest (Pedabo) is in the business of extending loans and financing projects to organizations mainly in the agricultural industry. Pedabo has a track record of extending substantial loans to and financing agricultural projects of companies in the rural parts of the country. Pedabo was impacted in 2012 by a major economic event, which negatively impacted its ability to fund projects and extend loans by 39%. Despite the hit it took, Pedabo continues to fund some key projects and loans. Pedabo has capacity to extend one more business loan in the first quarter of 2013. Bargains and BBC & Company are two organizations that Pedabo is considering for the loan. Bargains and BBC & Company are both meat processing companies. They process meat and in turn sell to restaurants and supermarkets. As the Financial Analyst of Pedabo, you have been tasked with analyzing the financial statements (using financial ratios) of Bargains and BBC & Company and making a recommendation to the Senior Management of Pedabo in regards to which of the two organizations is better suited for the loan.

Required: 1. Compute the following ratios for Bargains and BBC & Company

a. Current Ratio

b. Quick Ratio

c. Times Interest Earned Ratio

d. Debt to Equity Ratio

e. Return on Sales Ratio

f. Return on Assets Ratio

g. Gross Profit Ratio

h. Profit Margin Ratio

2. Assuming that the current, debt to equity, times interest earned, debt to equity, return on sales and profit margin ratios are the only financial ratios that Pedabo uses in making loan or financing decisions, determine which of the two organizations is better suited for the loan. Carefully explain the rationale for your decision.