Johnson Home Products, Inc. (JHP) manufactures plumbing fixtures and other home improvement products that are sold in Home Depot and Wal-Mart as well as hardware stores. JHP 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 JHP. The acquiring firm (GSI) is a retailer of garden supplies; it sees the potential synergies of the combined firm and is willing to pay JHP shareholders $25 cash per share for their stock which is greater than the current stock price;

the stock has traded at about $23.45 in recent months. Summary financial information about JHP follows.

GEORGIA HOME PRODUCTS, INC.
Selected Financial Information
			Industry Avg
	2010	2009
Cash	$ 81,516,171	$ 2,546,000
Accounts Receivable	56,778,465	84,776,336
Inventory	39,665,416	49,886,736
Long-lived Assets
Gross Book Value	168,163,461	145,663,461
Net Book Value	104,172,967	98,447,620
Replacement Cost	175,483,000	175,483,000
Liquidation Value	67,430,000	78,366,000
Current Liabilities	122,365,299	101,667,355
Long-term Debt	34,567,445	34,577,653
Capital Expenditures	22,500,000	11,234,000
Sales	645,339,000	589,645,335
Cost of Sales	498,657,788	453,887,390
Operating Expense*	102,667,355	122,654,888
Income Tax Rate	38%	38%	38.0%
Depreciation Expense	16,774,653	14,662,893
Dividends	1,500,000	1,000,000
Year End Stock Price	$ 23.45	$ 7.22
Number of Outstanding Shares	22,587,336	22,847,559
Sales Multiplier			1.40
Free Cash Flow Multiplier			8.80
Earnings Multiplier			13.50
Cost of Capital	6.1%	6.1%
Accounts Receivable Turnover			5.50
Inventory Turnover			8.60
Current Ratio			1.90
Quick Ratio			1.10
Cash Flow from Operations Ratio			1.40
Free Cash Flow Ratio			1.10
Gross Margin Percentage			33.0%
Return on Assets (Net Book Value)			19.0%
Return on Equity			28.0%

Required

Evaluate JHP as a company using financial ratio analysis.

Since the calculation of some ratios requires the averaging of balances, you may assume that the balances in 2008 are the same as those in2009.