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:

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Balance Sheet as of December 31, 2018 (In Thousands) Accounts payable Cash $145,600 $200,200 Receivables 509,600 Other current liabilities 163,800 Inventories Notes payable to bank 364,000 218,400 Total current liabilities Total current assets $1,019,200 $582,400 Long-term debt $436,800 Net fixed assets 800,800 Common equity (80,080 800,800 shares) Total liabilities and equity Total assets $1,820,000 $1,820,000 Barry Computer Company: Income Statement for Year Ended December 31, 2018 (In Thousands) Sales $2,800,000 Cost of goods sold Materials $1,288,000 Labor 840,000 Heat, light, and power 112,000 Indirect labor 140,000 2,436,000 Depreciation 56,000 Gross profit 364,000 Selling expenses 168,000 General and administrative expenses 56,000 Earnings before interest and taxes (EBIT) 140,000 Interest expense 30,576 Earnings before taxes (EBT) 109,424 Federal and state income taxes (40 %)) 43,770 Net income 65,654 Earnings per share 0.81986 Price per share on December 31, 2018 14.00 a. Calculate the indicated ratios for Barry. Round your answers to two decimal places Ratio Industry Average Barry Current 1.71x x Quick 1.10x X Days sales outstanding 31.04 days days Inventory turnover 8.40x Total assets turnover 1,83x x Profit margin % 2.19% ROA 4.01% ROE 9.11% %e ROIC 7.50% TIE 4.61x X % Debt/Total capital 43.70% M/B 4.40% P/E 19.37% EV/EBITDA 10.51% aCalculation is based on a 365-day year. b. Construct the DuPont equation for both Barry and the industry. Round your answers to two decimal places FIRM INDUSTRY Profit margin % 2.19% Total assets turnover 1.83x Equity multiplier correct option based on Barry's strengths and weaknesses as revealed your analysis Sele Select- . 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 Hever the nany sems to be ia an averane liuirity tion and Ginanial verage is similar to ctes in the inrustry ability ratios are high compared to the industry net income should be higher given the amount of equity, assets, and invested capital 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 bes apital giver However, the company seems to be in an above average liquidity position and financial leverage is similar to others in the industry should he increaeasses incread r t Whe the company ofit marin is hinher than the inustry aerane ts ter profitaity ratis are lo invested capital. However, the company seems to be in a below average liquidity position and financial leverage is similar to others in the industry. mared to the industrye iocome should he higher e theamut fey assets ad ales 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 l below the indust ya less stringaelestion eolicy, The total assets t ain iswell below the industry average so sales w compared to the industry net income should be higher given the amount of equity, assets, and The f d ales adatandine ratio ie r ieng as the ind . ating that the firm should loose should be increased, assets increased, or both. While the company's profit margin is higher than the industry average, t or other profitability ratios are Suppose Barry had doubled its sales as well as its inventories, accounts receivable, and common equity during 2018. How would that information affect the validity of your ratio analysis? (Hint: Think about averages and the effects f rapid growth on ratios if averages dre not used. No calculations are needed .If 2018 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 return to supernormal conditions in 2019 could hurt the firm's stock price 2018 ratios wil be misled, and a year will be distorted and a comparison between them and industry averages will have substantial meaning. Potential investors who look only at 2018 ratios will be well informed, and a return to normal conditions in 2019 could hurt the firm's stock price. ill be distorted and a comparison between them and industry averages will have little meaning. Potential investors who look only a TT n this vear 2018 ratios wil e misled, and a 2 conditions in 2019 could burt th ios based e Ibe accurate and a comparison between them and industry averages will have substantial meaning. Potential investors need only look at 2018 ratios to be well If 2018 represents a period of supernormal growth for the firm, ratios based on this year informed, and a return normal conditions in 2019 could help the firm's stock price. year will be distorted and a comparison between them and industry averages will have little meaning. Potential investors who look only at 2018 ratios misled, and a continuation af normal conditions in 2019.codd burt the firm's stork price