Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 its book value. Since dollars are in thousands, number of shares are shown in thousands too.

Barry Computer Company:
Balance Sheet as of December 31, 2018 (In Thousands)
Cash $111,600 Accounts payable $139,500
Receivables 241,800 Other current liabilities 83,700
Inventories 260,400 Notes payable to bank 46,500
Total current assets $613,800 Total current liabilities $269,700
Long-term debt $260,400
Net fixed assets 316,200 Common equity (39,990 shares) 399,900
Total assets $930,000 Total liabilities and equity $930,000

Barry Computer Company: Income Statement for Year Ended December 31, 2018 (In Thousands)
Sales $1,550,000
Cost of goods sold
Materials $728,500
Labor 372,000
Heat, light, and power 46,500
Indirect labor 155,000
Depreciation 31,000 1,333,000
Gross profit $ 217,000
Selling expenses 139,500
General and administrative expenses $ 31,000
Earnings before interest and taxes (EBIT) $ 46,500
Interest expense 28,644
Earnings before taxes (EBT) $ 17,856
Federal and state income taxes (40%) 7,142
Net income $ 10,714
Earnings per share $ 0.26792
Price per share on December 31, 2018 $ 11.00

  1. Calculate the indicated ratios for Barry. Round your answers to two decimal places.
    Ratio Barry Industry Average
    Current x 2.23x
    Quick x 1.25x
    Days sales outstandinga days 27.11 days
    Inventory turnover x 6.13x
    Total assets turnover x 1.94x
    Profit margin % 0.66%
    ROA % 1.28%
    ROE % 2.98%
    ROIC % 8.00%
    TIE x 1.57x
    Debt/Total capital % 42.12%
    M/B % 3.10%
    P/E % 43.37%
    EV/EBITDA % 10.70%
    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 % 0.66%
    Total assets turnover x 1.94x
    Equity multiplier x x

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions

Question

Discuss five types of employee training.

Answered: 1 week ago

Question

Identify the four federally mandated employee benefits.

Answered: 1 week ago