You are the new accountant and the Board of Directors assigned you to evaluate the performance of one of its subsidiaries JB. Specifically, you are asked to evaluate whether JB is creating fundamental (or economic) value over the years. As well, you have to highlight any weakness in JBs ability to create value. Write a brief report of 50 words or less to the Board of Directors. You may attach exhibits etc to support your report.

JB Corp EXHIBIT 1 1 1999 1998 1997 1996 1995 1994 1 Net sales 2 Cost of sales 3 Gross proflt 4 Selling, general, & administrative expenses 5 Earnings before Interest and taxes 6 Not Income $237.0 145.3 91.8 82.9* 8.9* 8,0* $209.2 136.2 73.0 63.9 9.1 6,2 $174.2 114.3 59.9 53.5 $167.2 115.2 51.9 45.5 6.4 3.9 $155.3 109.1 46.2 36.4 9.8 5.9 $148.8 109.8 39.0 36.3 2.8 (1.9) 6.4 3.9 7 Working capital. 8 Total assets 9 Long-term debt and obligations 10 Stockholders' equity $ 42.8 $ 48.4 $ 51.4 $ 50.1 150,6 149.5 146.5 $136.7 16.7 20.5 25,7 31.1 89.4 90.9 86.9 82,7 $ 51.0 $ 37,5 131.1 120.3 32,0 32.4 78.5 72,5 Per-share figures: Sales Earnings Book equlty $31.34 $ 1.06* $11.82 Gross margin (3/1) Operating margin (5/1) Net Income margin (6/1) Asset turnover (1/9) Working capital turnover (1/8) 38.7% 3.8%* 3.4%* 1.6 5.5 34.9% 4.3% 3.0% 1.4 4,3 34.4% 3.7% 2.2% 1.2 3.4 31.0% 29.7% 26.2% 3.8% 6.3% 1.9% 2.3% 3,8% -1.3% 1.2 1.2 1.2 3.3 3.0 4.0 ROA (5 x (1 - 40%/9) 3.5%* 3.7% 2.6% 2.8% 4.5% ROE (6/11) 1.4% 8.9%* 6.8% 4.5% 4.7% 7.5% -2.6% Yield to maturity on 30-year U.S. Treasury bonds (DataStream) 6.5% . 5.1% 5.9% 6.6% 6.0% 7.9%