Given the following balance sheet, income statement, historical ratios and industry averages, calculate the Pulp, Paper, and Paperboard, Inc. financial ratios for the most recent year. Analyze its overall financial situation for the most recent year. Analyze its overall financial situation from both a crosssectional and timeseries viewpoint. Income Statement Pulp, Paper and Paperboard, Inc. For the Year Ended December 31, 2008 __________________________________________________________ Sales Revenue $2,080,976 Less: Cost of Goods Sold 1,701,000 Gross Profits $ 379,976 Less: Operating Expenses 273,846 Operating Profits $ 106,130 Less: Interest Expense 19,296 Net Profits Before Taxes $ 86,834 Less: Taxes (40%) 34,810 Net Profits After Taxes $ 52,024 Balance Sheet Pulp, Paper and Paperboard, Inc. December 31, 2008 ASSETS Cash $ 95,000 Accounts receivable 237,000 Inventories 243,000 Total current assets $ 575,000 Gross fixed assets 500,000 Less: Accumulated depreciation 75,000 Net fixed assets $ 425,000 Total assets $1,000,000 LIABILITIES & STOCKHOLDERS EQUITY Current liabilities Accounts payable $ 89,000 Notes payable 169,000 Accruals 87,000 Total current liabilities $ 345,000 Longterm debts 188,000 Total liabilities $ 533,000 Stockholders' equity Common stock 255,000 Retained earnings 212,000 Total stockholders' equity $ 467,000 Total liabilities and stockholders' equity $1,000,000 Historical and Industry Average Ratios Pulp, Paper and Paperboard, Inc. Industry average Ratio 2006 2007 2008 2008 Current Ratio 1.6 1.7 _____ 1.6 Quick Ratio 0.9 1.0 _____ 0.9 Inventory Turnover 8.1 9.3 _____ 8.4 Total Asset Turnover 2.3 2.2 _____ 2.2 Debt Ratio 60% 56% _____ 58% Return on total assets 4.1% 3.5% _____ 3.08% Return on Equity 10.3% 7.9% _____ 7.3%