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10. Using the following data for Jackson Products Company, answer Parts a through g: Jackson Products Company's Balance Sheet December 31, 2016 Cash $ 240,000 Accounts payable $ 380,000 Accounts receivable 320,000 Notes payable (9%) 420,000 Inventory 1,040,000 Other current liabilities 50,000 Total current assets $1,600,000 Total current liabilities $ 850,000 Net plant and equipment 800,000 Long-term debt (10%) 800,000 Total assets $2,400.000 Stockholders' equity 750,000 Total liabilities and stockholders' equity $2,400,000 $3,000,000 1,800,000 $1,200,000 860,000 $340,000 Income Statement for the Year Ended December 31, 2016 Net salas (all on credit) Cost of sales Gross profit Selling, general, and administrative expenses Earnings before interest and taxes Interest Notes $37,800 Long-term debt 90,000 Total interest charges Earnings before taxes Federal income tax (40%) Earnings after taxes 117,800 $ 222,200 88 BRD $ 133 320 Industry Averages Current ratio Quick ratio Average collection period (365 day year) Inventory turnover ratio Total asset turnover ratio Times interest eamed ratio Net profit margin ratio Return on investment ratio Total assets/stockholders' equity (equity multiplier) ratio Retum on stockholders' equity ratio P/E ratio 2.5:1 1.1:1 35 days 24 times 1.4 times 3.5 times 4.0% 5.6% 3.0 times 16.8% 9.0 times a. Evaluate the liquidity position of Jackson relative to that of the average firm in the industry. Consider the current ratio, the quick ratio, and the net working capital (current assets minus current liabilities) for Jackson. What problems, if any, are suggested by this analysis? b. Evaluate Jackson's performance by looking at key asset management ratios. Are any problems apparent from this analysis? c. Evaluate the financial risk of Jackson by examining its times interest earned ratio and its equity multiplier ratio relative to the same industry average ratios. d Evaluate the profitability of Jackson relative to that of the average firm in its industry. e. Give an overall evaluation of the performance of Jackson relative to other firms in its industry f. Perform a DuPont analysis for Jackson. What areas appear to have the greatest need for improvement? g. Jackson's current P/E ratio is seven times. What factor(s) are most likely to account for this ratio relative to the higher industry average ratio

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