Data for Barry Computer Co. and its industry averages follow. The firm's debt is priced at par, to the market value of its debt equals its book value. Since doitars are in thousands number of shares are shown in thousands too. Barry Computer Company Balance Sheet as of December 31, 2015 (In Thousands) Cash $156,310 Accounts payable Rocelvables 369,460 Other current liabilities Inventories 284,200 Notes payable to back Total current assets $809,970 Total current liabilities Long-term debt Net fixed assets 611,030 Common equity (51,156 shares) Total assets $1,421,000 Total abilities and equity $213,150 227,360 71,050 $511.560 $397,880 511,560 $1.421,000 Barry Computer Company Income Statement for Year Ended December 31, 2018 (In Thousands) $3,450,000 Cost of goods sold Materials 51.225.000 Labor 612.500 Meat, light, and power 122.500 Indirect labor 90.000 Depreciation 49,000 2,107,000 Grosso 343,000 Sing expenses 196,000 General and administrative expenses 73,500 Earnings before interest and taxes (OT) 73,500 Interestepense 31.330 Earnings before (EST) 1 41.670 Federal and state income taxes (40) 10,660 25.000 Earno per 048874 Price per chat on December 2015 X a. Calculate the indicated ratios for Barry. Round your answers to two decimal places Ratio Barry Industry Average Current X 1.51x Quick 1.00% Days sales outstanding days 26.21 days Inventory turnover X 9.24% Total assets turnover 1.91% Profit margin % 0.97% ROA % 1.85% ROE % 5.2096 ROIC % 7.30% TIE 2.22 Debt/Total capital 47.23% MB % 4.30% 96 29.2890 EV/EBITDA 10.12% P/E Calculation 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 0.97 Total assets turnover 1.91 Equity multiplier 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 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 pront margin is higher than the industry average, its other profitability ratios are low compared to the industry 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 11. 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 no sales should be increased as increased, or both. While the company profit margin is higher than the industry average, its other profitability ratios are low compared to the industrynet 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 creditor for a more that the Select the correct option based on Barry's strengths and weakness as revealed by your analysis, Select 1. 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 11. The firm's days sales outstanding ratio is comparable to the industry average, indicating that the firm should neither tighten credit ror arforon a more stringent collection policy. The total assets turnover ratio is well below the industry average so sales should be increased, assets increased, or bot. 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 IV. 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 anforce 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 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) 1. 1 2018 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 2018 ratios to be well informed, and a return to normal conditions in 2019 could help the firm's stock price 11. 1 2018 represents a deriod 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 2018 ratios will be misied, and a continuation of normal conditions in 2019 could hurt the firm's stock price m. f 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 at 2018 ratios will be misled, and a return to supernormal conditions in 2019 could hurt the firm's stock price IV. 17 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 2015 ratios will be well informed, and a return to normal conditions in 2019 could hurt the firm's stock price V. 1r 2018 represents a period of supernormal growth for the firm ratios based on this year will be distorted and a compartson between them and industry averages will have the meaning potential investors who look only at 2018 ratios will be mited, and a return to normal conditions in 2019 could hurt the firm's stock brice