CHALLENGE Using the following data for Jackson Products Company, answer Parts a through g:

Details: An account shows the following information for Jackson Products Company's Balance Sheet December 31, 2016. Cash $240,000, Accounts receivable 320,000, Inventory 1,040,000, Total current assets $1,600,000, Net plant and equipment 800,000, Total assets $2,400,000. Accounts payable $380,000, Notes payable (9%) 420,000, Other current liabilities 50,000, Total current liabilities $850,000. Long-term debt (10%) 800,000, Stockholders' equity 750,000, Total liabilities and stockholders' equity $2,400,000. Income Statement for the Year Ended December 31, 2016 shows the following: Net sales (all on credit) $3,000,000, Cost of sales 1,800,000, Gross profit $1,200,000, Selling, general, and administrative expenses 860,000, Earnings before interest and taxes Interest $340,000, Notes $37,800, Long-term debt 80,000, Total interest charges 117,800, Earnings before taxes $222,200, Federal income tax (40%) 88,880, Earnings after taxes $133,320. Industry Averages shows the following data: Current ratio- 2.5:1, Quick ratio- 1 1:1, Average collection period (365-day year) 35 days, Inventory turnover ratio 2.4 times, Total asset turnover ratio 1.4 times, Times interest earned ratio 3.5 times, Net profit margin ratio 4.0%, Return on investment ratio 5.6%, Total assets/stockholders' equity (equity multiplier) ratio 3.0 times, Return on stockholders' equity ratio 16.8%, P/E ratio 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?