Question

Data for Barry Computer Co. and its industry averages follow. The firm's debt is priced at par, so the market value of its debt equals its book value. Since dollars are in thousands, number of shares are shown in thousands too.

Barry Computer Company:
Balance Sheet as of December 31, 2019 (In Thousands)
Cash	$	49,875		Accounts payable	$	129,675
Receivables		269,325		Other current liabilities		109,725
Inventories		269,325		Notes payable to bank		49,875
Total current assets	$	588,525		Total current liabilities	$	289,275
				Long-term debt		219,450
Net fixed assets		408,975		Common equity (48,877.5 shares)		488,775
Total assets	$	997,500		Total liabilities and equity	$	997,500

Barry Computer Company: Income Statement for Year Ended December 31, 2019 (In Thousands)
Sales			$	1,750,000
Cost of goods sold
Materials	$735,000
Labor	402,500
Heat, light, and power	122,500
Indirect labor	157,500
Depreciation	87,500			1,505,000

Gross profit		$	245,000
Selling expenses			122,500
General and administrative expenses			52,500
Earnings before interest and taxes (EBIT)		$	70,000
Interest expense			15,362
Earnings before taxes (EBT)		$	54,638
Federal and state income taxes (25%)			13,660
Net income		$	40,978
Earnings per share		$	0.8384
Price per share on December 31, 2019		$	13.00

1. Calculate the indicated ratios for Barry. Do not round intermediate calculations. Round your answers to two decimal places.

   Ratio	Barry	Industry Average
   Current	×	1.99	×
   Quick	×	1.13	×
   Days sales outstandinga	days	26	days
   Inventory turnover	×	7.09	×
   Total assets turnover	×	1.98	×
   Profit margin	%	2.19	%
   ROA	%	4.32	%
   ROE	%	8.92	%
   ROIC	%	7.10	%
   TIE	×	4.61	×
   Debt/Total capital	%	34.43	%
   M/B		4.30
   P/E		18.51
   EV/EBITDA		7.74

   
   ^aCalculation is based on a 365-day year.
   
2. Construct the DuPont equation for both Barry and the industry. Do not round intermediate calculations. Round your answers to two decimal places.

   	FIRM	INDUSTRY
   Profit margin	%	2.19%
   Total assets turnover	×	1.98×
   Equity multiplier	×	×

Answer 1

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