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Analyze liquidity/solvency/profitability with financial data

Use the attached file.

1. Evaluate the liquidity position of Jackson relative to that of the average firm in the industry. Consider the current ratio and the quick ratio for Jackson. What problems, if any, are suggested by this analysis?

2. Evaluate Jackson's performance by looking at key asset management ratios. Are any problems apparent from this analysis?

3. Evaluate the financial risk of Jackson by examining its times interest earned ratio and its equity multiplier ratio relative to the industry average ratios.

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Solution Summary

This solution discusses classic ratios used to analyze liquidity, solvency, profitability and productivity (turnover or days) for a sample company based on their income statement and balance sheet.

Here are the ratios discussed:

Current ratio
Quick ratio
Average collection period (365-day year)
Inventory turnover ratio
Total asset turnover ratio
Times interest earned ratio
Net profit margin ratio
Return on investment ratio
Total assets/stockholders' equity (equity multiplier) ratio
Return on stockholders' equity ratio
P/E ratio

Discussion is 631 words.

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