Bella Beauty Inc. (11111) has been in operations for just over five years and is a private company..

Bella Beauty Inc. (11111) has been in operations for just over five years and is a private company following ASPE. The company designs and manufactures high-end maternity clothing under the brand name of BBI Chic . BBI experienced initial success; however, the company has struggled somewhat over the past 12 months due to the general economic downturn. BBI management has recently concluded that their target market is too narrow as many women are not willing to pay a premium for clothing they will wear only for a few months. Management has therefore decided to launch a more affordable clothing line that will be labelled BB! Trend . They expect that by offering two different lines, they will be better poised to compete in the maternity clothing market. The main obstacle BBI faces is that it does not have sufficient capital to design, manufacture, and market the BBI Trend— line. The company has applied for a $150,000 extension of its operating facility from the bank. The bank is willing to discuss an extension as soon as 3131 s audited financial statements for the year ending 31 December 20X8 are finalized. BBI has been forewarned that its debt-to-equity ratio as of fiscal year-end will be a determining factor in whether it will be granted the extension. The bank prefers a ratio below 2.5. The bank is also interested in reported income from continuing operations. Reporting income from continuing operations that is fairly consistent with the prior year would demonstrate that BBI i

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