Brooks Plumbing Products Inc. (BPP) manufactures plumbing fixtures and other home improvement products that are sold in Home Depot and Walmart as well as hardware stores. BPP has a solid reputation for providing value products, good quality, and a good price. The company has been approached by an investment banking firm representing a third company, Garden Specialties Inc. (GSI), that is interested in acquiring BPP. The acquiring firm (GSI) is a retailer of garden supplies; it sees the potential synergies of the combined firm and is willing to pay BPP shareholders $38 cash per share for their stock, which is greater than the current stock price; the stock has traded at about $35 in recent months. Summary financial information about BPP follows. 

Required

Evaluate BPP as a company using financial ratio analysis (including the liquidity, cash flow, and profitability ratios demonstrated in Exhibit 20.9). Because the calculation of some ratios requires the averaging of balances, you may assume for simplicity that the balances in 2020 are the same as those in 2021.

Transcribed Image Text:

BROOKS PLUMBING PRODUCTS INC. Selected Financial Information For the Years Ended December 31 2022 2022 2021 Industry Average $ 79,919,778 Cash Accounts receivable Inventory Long-lived assets $ 3,456,227 56,778,465 87,294,771 39,665,416 59,883,645 Gross book value 167,278,377 143,778,377 Net book value 100,620,809 95,887,302 Replacement cost Liquidation value Current liabilities Long-term debt Shareholders' equity Capital expenditures Sales 170,587,409 188,465,338 68,734,002 67,335,209 119,045,766 120,995,274 31,997,364 37,885,302 125,941,338 87,641,369 23,500,000 12,990,336 667,534,771 638,776,465