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, 2019 (In Thousands) Cash $ 64,600 Accounts payable Recelvables 387,600 Other current liabilities Inventaries 297,160 Notes payable to bank Total current assets $ 749,360 Total current liabilities Longterm debt Net fixed assets 542,640 Common equity (50,388 shares) Total assets $1,292,000 Total liabilities and equity 206,720 103,360 142.120 452,200 335.920 $ 503,880 $ 1,292,000 Barry Computer Company: Income Statement for Year Ended December 31, 2019 (In Thousands) Sales $1,900,000 Cost of goods sold Materials $779,000 Labor 418,000 Heat, light, and power 133,000 Indirect labor 190,000 Depreciation 38,000 1,550,000 Gross profit $ 342,000 Selling expenses 209,000 General and administrative expenses 57,000 Earnings before interest and taxes (EBIT) $ 76,000 Interest expense 36,951 Earnings before taxes (EBT) $ 39.049 $ 342,000 209,000 57,000 $ 76,000 36,951 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 Earnings per share Price per share on December 31, 2019 $ 39.049 $ 0.5812 11.00 a. Calculate the indicated ratios for Barry. Do not round intermediate calculations. Round your answers to two decimal places. Ratio Industry Average 35 days Current Quick Days sales outstanding Inventory turnover Total assets turnover Profit margin ROA 6.98 x 1.449 2.39 ROE ROIC TIE 7.50% 1.99 47.58% Debt/Total capital M/B 3.10 21.36 EV/EBITDA 10.91 a. Calculate the indicated ratios for Barry. Do not round Intermediate calculations. Round your answers to two decimal places Ratio Barry Industry Average Current Quick Days sales outstanding Inventory turnover Total assets turnover Profit margin ROA ROE 7.50 ROIC Debt/Total capital M/B EV/EBITDA 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 FERN INDUSTRY Proft margin Total assets turnover Equity multiplier Select the correct option based on Barry's strengths and weaknesses as revealed by your analysis I The firm's days sales outstanding ratio is more than the industry average, indicating that the firm should tighten credit renforce 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 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 an above average liquidity position and financial leverage is similar to others in the industry II. 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. III. 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 TV. 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 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 less 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 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. 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 vidity 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. 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 misted, and a continuation of normal conditions in 2020 could hurt the firm's stock price T 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 misted, and a return to supernormal conditions in 2020 could hurt the firm's stock price TIL. 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 w have substantial meaning. Potential investors who look only at 2019 ratios will be well informed, and a return to normal conditions in 2020 coudut 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 inte meaning. Potential investors who look only at 2019 ratios will be misted, 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 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