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, the number of shares is shown in thousands too. Barry Computer Company: Balance Sheet as of December 31, 2021 (in thousands) Cash $ 93,720 Accounts payable $ 128,865 Receivables 304,590 Other current liabilities 105,435 Inventories 281,160 Notes payable to bank 70,290 Total current assets 679,470 Total current liabilities $ 304,590 Long-term debt 304,590 Net fixed assets Common equity (56,232 shares) 562,320 Total assets $1,171.500 Total liabilities and equity $1,171,500 492.030 Barry Computer Company: Income Statement for Year Ended December 31, 2021 (in thousands) Sales $1,650,000 Cost of goods sold Materials $676,500 Labor 412,500 Heat, light, and power 66,000 Indirect labor 132,000 1,287,000 Gross profit $363,000 Selling expenses 108,000 General and administrative expenses 33,000 Depreciation 66,000 Earnings before interest and taxes (EBIT) $ 66,000 Interest expense 27,413 Earnings before taxes (ERT) $ 39,587 Federal and state income taxes (25%) 9,647 Net Income $ 28,940 Earnings per share $ 0.5147 Price per share on December 31, 2021 $ 12.00 * a. Calculate the indicated ratios for Barry. Do not round intermediate calculations. Round your answers to two decimal places. Ratio Barry Industry Average Current X 2.19% Quick 1.36 Days sales outstanding days 31 days Inventory turnover 6.41 Total assets turnover X 1.59 Profit margin 1.64% ROA 2.60% ROE 5.72% ROIC 7.80% TIE 2.46% Debt/Total capital 40.9046 M/B 3.20 P/E 25.94 EV/EBITDA 9.51 X 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 1.54% Total assets turnover 1.59 Equity multiplier Profit margin C. 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 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. II. The firm's days sales outstanding ratio is less than the industry average, Indicating that the fimm 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. III. 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 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 IV. 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 tumover 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. V. 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, xsets, 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. -Select- d. Suppose Barry had doubled its sales as well as its inventories, accounts receivable, and common equity during 2021. 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. Df 2021 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 2021 ratios will be misled, and a return to Supernormal conditions in 2022 could hurt the firm's stock price II. of 2021 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 2021 ratios will be well informed, and a return to normal conditions in 2022 could hurt the firm's stock price. III. T 2021 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 2021 ratios will be misled, and a return to normal conditions in 2022 could hurt the firm's stock price. IV. If 2021 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 2021 ratios to be well informed, and a return to normal conditions in 2022 could help the firm's stock price. V. If 2021 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 2021 ratios will be misled, and a continuation of normal conditions in 2022 could hurt the firm's stock price. Select