Sammy Corp. (Sammy) has current assets of $160,000, total assets of $200,000, current liabilities of $85,000, and total liabilities of $100,000.

Sammy is trying to negotiate a bank loan of $75,000. The terms of the loan require repayment over two years and state that the debt ratio CANNOT exceed 0.60.

Required: a) Calculate Lights debt ratio before and after the bank loan.

b) Explain whether the bank should grant the loan to Light.