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: Income Statement for Year Ended December 31, 2021 (in thousands) "Calculation is based on a 365 -day year. b. Construct the Dupont equation for both Barry and the industry. Do not round intermediote calculations: Round your answers to two decimal b. Construct the Dupont equation for both Barry and the industry. Do not round intermedlate calculations. Round your answers to two decimal places. FIRM Profit margin Total assets turnover Equity multiplier INDUSTRY 2.32% 1,51 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 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. II. 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. III. 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 profitabity ratios are low compared to the industry - net income should be higher given the amount of equiry, 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. IV. 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 imvested capital. Finally, It's market value ratios are also below industry averages. However, the company seems to be in an average liquidity position and finandal leverage is similar to others in the industry. V. The firm's doys sales outstanding ratio is more than twice as long as the industry avorage, indicating that the firm should loosen credit of 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, ies other profitability ratios are low compared to the industry - net income should be higher gliven 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 hers 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. If 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. 11. If 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 littie meaning. Potential investors who fook only at 2021 ratios will be misted, and a return to normal conditions in 2022 could hurt the firm's stock price. 111. 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. IV. If 2021 represents a period of normal growth for the firm, ratios based on this year will be distorted and a comparison between them If 2021 represents period of normal growth for the firm, ratios based on this year will be distorted and a conpanson between the and industry averages will have litse meaning. Potential investors who look only at 2021 ratips will be misled, and a continuation of normal conditions in 2022 could hurt the firm's stock price. V. If 2021 represents a period of normal growth for the firm, ratios based on this vear will be accurate and a comparison between them supernormal conditions in 2022 could hurt the firm's stock price