Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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, 2019 (In Thousands) | ||||||
Cash | $ | 68,640 | Accounts payable | $ | 145,860 | |
Receivables | 231,660 | Other current liabilities | 68,640 | |||
Inventories | 205,920 | Notes payable to bank | 77,220 | |||
Total current assets | $ | 506,220 | Total current liabilities | $ | 291,720 | |
Long-term debt | 197,340 | |||||
Net fixed assets | 351,780 | Common equity (36,894 shares) | 368,940 | |||
Total assets | $ | 858,000 | Total liabilities and equity | $ | 858,000 |
Barry Computer Company: Income Statement for Year Ended December 31, 2019 (In Thousands) | ||||
Sales | $ | 1,300,000 | ||
Cost of goods sold | ||||
Materials | $559,000 | |||
Labor | 338,000 | |||
Heat, light, and power | 39,000 | |||
Indirect labor | 78,000 | |||
Depreciation | 65,000 | 1,079,000 |
Gross profit | $ | 221,000 | |
Selling expenses | 156,000 | ||
General and administrative expenses | 13,000 | ||
Earnings before interest and taxes (EBIT) | $ | 52,000 | |
Interest expense | 15,787 | ||
Earnings before taxes (EBT) | $ | 36,213 | |
Federal and state income taxes (25%) | 9,053 | ||
Net income | $ | 27,160 | |
Earnings per share | $ | 0.7362 | |
Price per share on December 31, 2019 | $ | 13.00 |
Construct the DuPont equation for both Barry and the industry. Do not round intermediate calculations. Round your answers to two decimal places.
FIRM | INDUSTRY | |
Profit margin | % | 1.95% |
Total assets turnover | 1.71 | |
Equity multiplier |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started