6. You have dreamt of owning shares in Barry Computer Company. However, you have been advised that you should "investigate the company further before making any investment decisions. You decided it is time to look at some of the company's financial ratios using its most recent financial statements. Barry Computer Company: Balance Sheet as of December 31, 2015 (In Thousand) Cash Receivables Inventories $77,500 336,000 241,500 Total current assets $655,000 Net fixed assets 292,500 Account payable $129,000 Notes payable 84,000 Other current 117,000 liabilities Total current liabilities $330,000 Long-term debt 256,500 Common equity 361,000 Total liabilities and $947,500 equity Total assets $947,500 Barry Computer Company: Income Statement for year ended December 31, 2015(In Thousand) $1,607,500 Sales Cost of goods sold Materials Labor Heat, light, and power Indirect labor Depreciation Gross profit 717,000 453,000 68,000 113,000 41,500 1,392,500 215,000 3 115.000 30,000 70,000 Selling e conces General and administrative expenses Earnings before interesi od taxes (EBIT) Interest expense Earnings before taxes (EBT) Federal and state income taxes (40%) Net income 24.500 45,500 18,200 $27,300 (a) After reviewing all the available financial ratios, calculate the indicated ratios for Barry. Barry Computer Ratio Current assets/current liabilities Days sales outstanding Sales/inventories Sales/total assets Net income/sales Net income/total assets Total debu/total assets Net income/common equity (b) Using the financial statements of Barry Computer Company, break down the company's ROE using the Du Pont system. What can you say about the company? (c) Using the ratios you have calculated, outline Barry Computer Company's strengths and weaknesses (relative to the industry) as revealed by your analysis. Explain. Ratio Barry Computer Industry Average Current assets/current 2.0X liabilities Days sales outstanding Sales/Inventories 6.7X Sales/total assets 3.0X Net income/sules 1.2% Net income/Total assets 3.6% Total debt/Total assets 60.0% Net income/common equity 9.0% (14) 35 days