RATIO ANALYSIS Data for Barry Computer Co. and its industry averages follow. Barry Computer Company: Balance Sheet as of...

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Finance

RATIO ANALYSIS

Data for Barry Computer Co. and its industry averagesfollow.

Barry Computer Company:
Balance Sheet as of December 31, 2016 (InThousands)
Cash$143,100Accounts payable$171,720
Receivables372,060Other current liabilities128,790
Inventories386,370Notes payable to bank85,860
   Total current assets$901,530   Total current liabilities$386,370
Long-term debt$372,060
Net fixed assets529,470Common equity672,570
Total assets$1,431,000Total liabilities and equity$1,431,000
Barry Computer Company:
Income Statement for Year Ended December 31, 2016 (InThousands)
Sales$2,650,000
Cost of goods sold
   Materials$1,086,500
   Labor662,500
   Heat, light, and power79,500
   Indirect labor265,000
   Depreciation79,5002,173,000
Gross profit$   477,000
Selling expenses291,500
General and administrative expenses79,500
   Earnings before interest and taxes(EBIT)$     106,000
Interest expense40,927
   Earnings before taxes (EBT)$     65,073
Federal and state income taxes (40%)26,029
Net income$     39,044
  1. Calculate the indicated ratios for Barry. Round your answers totwo decimal places.
    RatioBarry             Industry Average
    Currentx2.28x
    Quickx1.36x
    Days sales outstandingadays24.40 days
    Inventory turnoverx7.06x
    Total assets turnoverx2.05x
    Profit margin%1.40%
    ROA%2.87%
    ROE%6.18%
    ROIC%7.00%
    TIEx2.54x
    Debt/Total capital%39.21%

    aCalculation is based on a 365-day year.
  2. Construct the DuPont equation for both Barry and the industry.Round your answers to two decimal places.
    FIRMINDUSTRY
    Profit margin%1.40%
    Total assets turnoverx2.05x
    Equity multiplierxx

Answer & Explanation Solved by verified expert
3.7 Ratings (453 Votes)

a] Ratio Barry              Industry Average
Current 2.33 2.28x
Quick 1.33 1.36x
Days sales outstandinga 51.25 24.40 days
Inventory turnover 5.62 7.06x
Total assets turnover 1.85 2.05x
Profit margin 1.47% 1.40%
ROA 2.73% 2.87%
ROE 5.81% 6.18%
ROIC 5.63% 7.00%
TIE 2.59 2.54x
Debt/Total capital 53.00% 39.21%
b. Construct the DuPont equation for both Barry and the industry. Round your answers to two decimal places.
FIRM INDUSTRY
Profit margin 1.47% 1.40%
Total assets turnover 1.85 2.05x
Equity multiplier 2.13 1.65
ROE Profit margin*Total assets turnover*Equity multiplier 5.81% 4.74%
[The ROE calculated in the first table seems to be wrong] [or one of the component ratios are wrong]

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