Question

RATIO ANALYSIS

Data for Barry Computer Co. and its industry averages follow.

Barry Computer Company:
Balance Sheet as of December 31, 2016 (In Thousands)
Cash	$63,480		Accounts payable	$103,155
Receivables	238,050		Other current liabilities	71,415
Inventories	198,375		Notes payable to bank	39,675
Total current assets	$499,905		Total current liabilities	$214,245
			Long-term debt	$166,635
Net fixed assets	293,595		Common equity	412,620
Total assets	$793,500		Total liabilities and equity	$793,500

Barry Computer Company: Income Statement for Year Ended December 31, 2016 (In Thousands)
Sales			$1,150,000
Cost of goods sold
Materials	$563,500
Labor	264,500
Heat, light, and power	46,000
Indirect labor	46,000
Depreciation	23,000		943,000

Gross profit		$   207,000
Selling expenses		126,500
General and administrative expenses		11,500
Earnings before interest and taxes (EBIT)		$     69,000
Interest expense		18,330
Earnings before taxes (EBT)		$     50,670
Federal and state income taxes (40%)		20,268
Net income		$     30,402

1. Calculate the indicated ratios for Barry. Round your answers to two decimal places.

   Ratio	Barry	Industry Average
   Current	x	2.30x
   Quick	x	1.35x
   Days sales outstandinga	days	35.31 days
   Inventory turnover	x	6.08x
   Total assets turnover	x	1.63x
   Profit margin	%	2.47%
   ROA	%	4.03%
   ROE	%	7.84%
   ROIC	%	7.20%
   TIE	x	3.79x
   Debt/Total capital	%	34.43%

   
   ^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.

   	FIRM	INDUSTRY
   Profit margin	%	2.47%
   Total assets turnover	x	1.63x
   Equity multiplier	x	x

Answer 1