Barry Computer Company: Balance Sheet as of December 31, 2019 (In Thousands) Cash $ 147,420 Accounts payable Receivables 417,690 Other current liabilities Inventories 282,555 Notes payable to bank Total current assets $ 847,665 Total current liabilities Long-term debt Net fixed assets 380,835 Common equity (41,769 shares) Total assets $1,228,500 Total liabilities and equity $ 208,845 184,275 147,420 $ 540,540 270,270 417,690 $1,228,500 Barry Computer Company: Income Statement for Year Ended December 31, 2019 (In Thousands) Sales $1,950,000 Cost of goods sold Materials $819,000 Labor 507,000 Heat, light, and power 58,500 Indirect labor 214,500 Depreciation 39,000 1,638,000 Gross profit $ 312,000 Selling expenses 175,500 General and administrative expenses 58,500 Earnings before interest and taxes (EBIT) $ 78,000 Interest expense 18,919 Earnings before taxes (EBT) 59,081 Federal and state income taxes (25%) 14,770 Net income $ 44,311 Earnings per share 1.0609 Price per share on December 31, 2019 $ 12.00 $ $ a. Calculate the indicated ratios for Barry. Do not round intermediate calculations. Round your answers to Ratio Barry Industry Average Current 1.52x Quick 1.02x Depreciation Gross profit Selling expenses General and administrative expenses Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Federal and state income taxes (25%) Net Income Earings per share Price per share on December 31, 2019 39,000 1,638,000 $ 312,000 175,500 58,500 $ 78,000 18,919 $ 59,081 14,770 $ 44,311 $ 1.0609 $ 12.00 XX a. Calculate the indicated ratios for Barry. Do not round Intermediate calculations. Round your answ Ratio Barry Industry Average Current 1.52x Quick 1.02x Days sales outstanding days 37 days Inventory turnover 7.54x Total assets turnover 1.79x Profit margin % 2.12% ROA % 3.80% ROE % 11.79% ROIC % 7.60% TIE 4.17x Debt/Total capital % 51.50% M/B 4.20 P/E 13.78 EV/EBITDA 8.72 "Calculation is based on a 365-day year. b. Construct the DuPont equation for both Barry and the industry. Do not round intermediate calcu FIRM INDUSTRY Profit margin % 2.12% Total assets turnover 1.79x Equity multiplier X x c. Select the correct option based on Barry's strengths and weaknesses as revealed by your analysis. 1. 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 11. The firm's days sales outstanding ratio is more than twice as long as the industry average, indicating that the firm should tighten credit or enforce a more stringent collection policy. The total assets turnover ratio is well below the industry average so sales should be increased, assets decreased, 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, Finally, it's market value ratios are also below Industry averages. However, the company seems to be in an average liquidity position and financial leverage is similar to others in the industry. 11. The firm's days sales outstanding ratio is more than twice as long as the industry average, indicating that the firm should loosen credit or apply a less 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 equlty, assets, and invested capital. However, the company seems to be in an average liquidity position and financial leverage is similar to others in the industry. TV. The firm's day sales outstanding ratio is less than the industry average Indicating that the firm should tighten credit or enforon a more stringent collection polley. The total assets turnover ratio is well below the industry average so sales should be increased, assets decreased, or both. While the company's profit margin is lower than the industry average, its other profitability ratios are high 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 an average liquidity position and financial leverage is similar to others in the industry V. The firm's days sales outstanding ratio is more than the industry average, indicating that the firm should tighten credit or enforce a more stringent collection policy. The total assets turnover ratio is well above the industry average so sales should be increased, assets increased, or both. While the company's profit marginis Ngher 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 an above average Iquidity position and financial leverage is similar to others in the Industry 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.) L. I 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. 11. I 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 m's stock price III. I 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. IV. 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 V 1F 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