Ratio Analysis Data for Barry Computer Co and its industry a

Ratio Analysis Data for Barry Computer Co. and its industry averages follow. Barry Computer Company: Balance Sheet as of December 31, 2014 (In Thousands) Cash $97,920 Accounts payable $228,480 Receivables 636,480 Other current liabilities 212,160 Inventories 342,720 Notes payable 81,600 Total current assets $1,077,120 Total current liabilities $522,240 Long-term debt $408,000 Net fixed assets 554,880 Common equity 701,760 Total assets $1,632,000 Total liabilities and equity $1,632,000 Barry Computer Company: Income Statement for Year Ended December 31, 2014 (In Thousands) Sales $2,400,000 Cost of goods sold Materials $1,128,000 Labor 576,000 Heat, light, and power 96,000 Indirect labor 264,000 Depreciation 72,000 $2,136,000 Gross profit $264,000 Selling expenses 144,000 General and administrative expenses 24,000 Earnings before interest and taxes (EBIT) $96,000 Interest expense 32,640 Earnings before taxes (EBT) 63,360 Federal and state income taxes (40%) 25,344 Net income $38,016 Calculate the indicated ratios for Barry. Round your answers to two decimal places. Ratio Barry Industry Average Current x 2.08x Quick x 1.42x Days sales outstandinga days 45.23days Inventory turnover x 7.65x Total assets turnover x 1.75x Profit margin % 1.48% ROA % 2.59% ROE % 6.02% ROIC % 7.00% TIE x 3.50x Debt/Total capital % 45.50% aCalculation is based on a 365-day year. Construct the Du Pont equation for both Barry and the industry. Round your answers to two decimal places. FIRM INDUSTRY Profit margin % 1.48% Total assets turnover x 1.75x Equity multiplier

Solution

Thank you for your question. Please see the below indicated ratio of Barry Computer Co.

1).Current Ratio= Current Assets/Current Liability

Current Assets= Cash+ A/c Receivable+ Inventories

Current Liability= A/c Payable+ Other Liability

CA= $97,920+$636,480+$342,720= $1,077,120

CL= $228,480+$212,160= $440,640

Current ratio= 1,077,120/440,640= 2.44x

2) Quick ratio= (Cash+ Cash Equivalent+Ac Receivables)/ Current Liability

= ($97,920+$636,480)/($228,480+$212,160)= 1.66x

3). Days sales outstanding= 365/Receivables Turnover

Receivable Turnover= Annual sales/ Average Receivable

Average Receivable= (Opening Receivable+ Closing Receivable)/2

Average Receivable= Since opening receivable is not available so we will use closing receivable as denominator to calculate receivable turnover.

So, it would be,

$2,400,000/$636,480=3.77

So, Days of sales outstanding would be

365/3.77= 96.81

4).Inventory Turnover= COGS/ Average Inventory

1,128,000/342,720= 3.29x

5) Total Assets Turnover= Revenue/ Average total assets

Since, we are not given opening total assets we will use total assets as average total assets.

$2,400,000/1,632,000= 1.47

5). Profit Margin= Net Income/Revenue

$38,016/2,400,000= 1.58%

6). ROA= Net income/ Average total assets

$38,016/$1,632,000= 2.32%

7). ROE= Net income/ Average total equity

$38,016/$701,760= 5.41%

8). ROIC= EBIT/Total capital

$96,000/($701,760+$81,600+$408,000)= 8.05%

9).TIE= EBIT/ Interest

$96,000/$32,640= 2.94x

10). Debt to total capital= Total Debt/ total capital

($81,600+$408,000)/$1,191,360= 41.09%

11). DUPONT= Net profit margin*Assets turnover*Leverage ratio

A). Industry Dupont Analysis:-

1.48*1.75*1= 2.59

B). Barry DuPont Anaysis

1.58*1.47*2.32,= 5.38

I believe I gave all the answers and if you have any questions please let me know

Thanks