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

Jackson Products Company's Balance Sheet

Industry Averages
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 7 times. What factor(s) are most likely to account for this ratio relative to the higher industry averageratio?

Jackson Products Company's Balance Sheet Cash Accounts recelvable inventory $ 380,000 420,000 1040000 Other current labilites50000 Total current assets$1.600,000 Total current llablitles 850,000 240,000 320,000 Accounts payable Notes payable (9%) Total current Net plant and equipment 800 000 $2400000 Long-term debt ( 10%) Stockholders' equity 800,000 Total assets 5000 Total lablities and stockholders' equity $2400000 Income Statement for the Year Ended December 31.2006 Net sales (all on credit) Cost of sales Gross profit Selling, general, and administrative expenses Earnings before Interest and taxes Interest: $3,000,000 $1.200,000 $ 340,000 Notes Long-term debt Total Interest charges $37,800 80,000 Earnings before taxes Federal income tax (40%) Earnings after taxes $ 222,200