JJPAutoparts,Inc.,amanufacturerofautoparts, expe-riencedadeclineinearningsintherecentyearandhasconsulteditsaccountingfirmforananalysisofthefirm'sfinancialstatements.Additionally,thecompanyknowsthatitsmarketvaluehasfallenfromtheprioryear,sincethesharepricehasfallenfrom$5.50attheendof2009to$2.34attheendof2010.So,JJPalsowantananalysisofthefirm'schangeinvalue.Thecomparativebalancesheetandincomestatementfor2010follows

BalanceSheet	2010		2009
Cash	$453,680		$455,675
Accountsreceivable	38,756		34,885
Inventory	156,754		134,665
Totalcurrentassets	649,190		625,225
Long-livedassets	452,541		445,287
Totalassets	$1,101,731		$1,070,512

Currentliabilities	$219,884		$265,448
Long-termdebt	350,000		350,000
Shareholders'equity	531,847		455,064
Totaldebtandequity	$1,101,731		$1,070,512
IncomeStatement Sales	$1,588,364		$1,455,634
Costofsales	1,289,665		1,109,886
Grossmargin	298,699		345,748
Operatingexpenses	174,855		133,874
Operatingincome	123,844		211,874
Taxexpense	47,061		80,512
Net income	$76,783		$131,362

Note: The amounts for operatingexpense above include depreciation

expense of $43,997 in 2009 and $42,746 in 2010.

AdditionalrelevantinformationaboutJJPisthatitusesacostofcapitalrateof5.7percent.Alsoit incurred capital expenditures of $100,000 in 2009 and $50,000 in 2010; there were no cash divi-dendsineitheryear.Thenumber ofoutstandingsharesis653,554,thesameinbothyears. Industrydata,theaveragevaluesforfirmsintheauto partsindustry,follow:

Salesmultiplier:	2.20
Free cashflowmultiplier	8.80
Earningsmultiplier	21.00
Accountsreceivableturnover	8.80
Inventoryturnover	7.00
Currentratio	2.00
Quickratio	1.10
Cashflowfromoperationsratio	1.40
Free cashflow ratio	1.10
Grossmarginpercentage	30.0%
Returnonassets(netbookvalue)	18.0%
Returnonequity	24.0%
Earnings per share	$1.15

Required:

1. Calculateandinterprettheliquidity,cashflow,andprofitabilityratiosforJJPfor2009and2010.Inyourcalculations, you may assume that the balance sheet values for 2009 are the same as for the prior year,2008.

2. Develop and interpret a business valuation for JJP for 2009 and 2010 using the methods you thinkappropriate