23. Problem 4.23 (Ratio Analysis) eBook 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 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 $ 133,200 Accounts payable $ 233,100 Receivables 466,200 Other current liabilities 249,750 Inventories 333,000 Notes payable to bank 116,550 Total current assets $ 932,400 Total current liabilities $ 599,400 Long-term debt 333,000 732,600 Net fixed assets 732,600 Common equity (73,260 shares) $1,665,000 Total assets $1,665,000 Total liabilities and equity Barry Computer Company: Income Statement for Year Ended December 31, 2019 (In Thousands) Sales $2,250,000 Cost of goods sold Materials $1,102,500 Labor 495,000 Heat, light, and power 67,500 Indirect labor 180,000 Depreciation 67,500 1,912,500 Gross profit $ 337,500 Selling expenses 202,500 General and administrative expenses 45,000 Earnings before interest and taxes (EBIT) $ 90,000 Interest expense 33,300 Earnings before taxes (EBT) 56,700 Federal and state income taxes (25%) 14,175 Net income $ 42,525 Earnings per share 0.5805 Price per share on December 31, 2019 10.00 $ Calculate the indicated time for Bar Denat round intermediate calculatione Pound in e per share on December 31, 2019 $ 10.00 X X X X a. Calculate the indicated ratios for Barry. Do not round Intermediate calculations. Round your answers to two decimal plac Ratio Barry Industry Average Current 1.53 Quick 0.95 Days sales outstanding days 35 days Inventory turnover 7.38 Total assets turnover 1.52 Profit margin % 1.77% ROA % 2.69% ROE % 6.45% ROIC 7.40% TIE 2.73 x 36.93% Debt/Total capital 4.00 M/B 19.85 P/E 9.16 EV/EBITDA % Calculation is based on a 365-day year, Calculation is based on a 365 day year. b. 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 % 1.77% Total assets turnover 1.52 Equity multiplier X X Parni's strengths and weaknesses as revealed by your analysis V. The firm's days sales outstanding ratio is comparable to the industry average, indicating that the firm should neither tighten credit nor enforce a more stringent collection policy. The total assets turnover ratio is well below the industry average so sales should be Increased, assets increased, or both. While the company's profit margin is higher than the industry average, its other profitability ratios are low compared to the industry.net Income should be higher given the amount of equity, assets, and invested capital, However, the company seems to be in a below average liquidity position and financial leverage is similar to others in the industry. Select d. Suppose Barry had doubled its sales as well as its inventories, accounts receivable, and common equity during 2019. How would that Information affect the validity of your ratio analysis? (Hint: Think about averages and the effects of rapid growth on ratios if averages are not used. No calculations are needed.) 1. If 2019 represents a period of supernormal growth for the firm, ratios based on this year will be accurate and a comparison between them and industry averages will have substantial meaning, Potential investors need only look at 2019 ratios to be well informed, and a return to normal conditions in 2020 could help the firm's stock price. II. If 2019 represents a period of normal growth for the firm, ratios based on this year will be distorted and a comparison between them and Industry averages will have little meaning. Potential investors who look only at 2019 ratios will be misled, and a continuation of normal conditions in 2020 could hurt the firm's stock price III. If 2019 represents a period of normal growth for the firm, ratios based on this year will be accurate and a comparison between them and industry averages will have substantial meaning. Potential investors who look only at 2019 ratios will be misled, and a return to supernormal conditions in 2020 could hurt the firm's stock price. IV. If 2019 represents a period of supernormal growth for the firm, ratios based on this year will be distorted and a comparison between them and Industry averages will have substantial meaning. Potential investors who look only at 2019 ratios will be well informed, and a return to normal conditions in 2020 could hurt the firm's stock price. V. If 2019 represents a period of supernormal growth for the firm, ratios based on this year will be distorted and a comparison between them and industry averages will have little meaning, Potential investors who look only at 2019 ratios will be misled, and a return to normal conditions in 2020 could hurt the firm's stock price. Select