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 Accounts payable $82,225 Receivables $56,925 202,400 164,450 Other current liabilities 101,200 Inventories Notes payable to bank 44,275 Total current assets $423,775 Total current liabilities $227,700 $132,825 Net fixed assets 208,725 Long-term debt Common equity (27,197.5 shares) 271,975 Total assets $632,500 Total liabilities and equity $632,500 Barry Computer Company: Income Statement for Year Ended December 31, 2018 (In Thousands) sales $1,150,000 Cost of goods sold 3529.000 Barry Computer Company: Income Statement for Year Ended December 31, 2018 (In Thousands) Sales $1,150,000 Cost of goods sold Materials $529,000 Labor 230,000 Heat, light, and power 80,500 Indirect labor 115,000 57,500 Depreciation 1,012,000 Gross profit 138,000 69,000 Selling expenses General and administrative expenses 23,000 Earnings before interest and taxes (EBIT) 46,000 Interest expense 10,626 Earnings before taxes (EBT) 35,374 Federal and state income taxes (40%) 14,150 Net income 21,224 Earnings per share $ 0.78037 Price per share on December 31, 2018 11.00 Earnings per share $ 0.78037 Price per share on December 31, 2018 $ 11.00 a. Calculate the indicated ratios for Barry. Round your answers to two decimal places. Ratio Barry Industry Average Current 1.86 1.79x Quick 1.14 X 1.19x Days sales outstanding 107.07 days 30.59 days Inventory turnover 0.42 X 7.20x Total assets turnover 0.11 2.12x Profit margin 30.8 1.76% 3.73% ROA 3.36 %6 ROE 7.80 8.67% ROIC 5.24 7.20% TIE 4.43x Debt/Total capital 38.84% M/B 5.10% 16.28% P/E 6.10% EV/EBITDA WWW. the industry. IV. The firm's days sales outstanding ratio is more than the industry average, indicating that the firm should tighten credito 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. V. 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. d. 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 of rapid growth on ratios if averages are not used. No calculations are needed.) -Select- I. If 2018 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 2018 ratios will be well informed, and a return to normal conditions in 2018 could hurt the firm's stock price. IL I 2018 represents a period of supernormal orowth 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 2018 ratios will be misled. and a return to normal conditions in 2019 could hurt the firm's stock price. ULIf 2018 represents a period of superormal 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 2018 ratios to be well informed, and a return to normal conditions in 2019 could help the firm's stock price. IV. If 2018 represents a period of normal growth for the firm, ratios based on this year will be distorted and a comparison between 2018 ratios will be misled, and a them and industry averages will have little meaning, Potential investors who look on continuation of normal conditions in 2019 could hurt the firm's stock price, will be accurate and a comparison between V IF 2018 represents a period of normal growth for the firm, ratios based on this LLLLL L