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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:

Balance Sheet as of December $31,2021($in thousands$)$

Cash $ $141,075$ Accounts payable $ $141,075$

Receivables $357,390$ Other current liabilities $94,050$

Inventories $253,935$ Notes payable to bank $65,835$

Total current assets $ $752,400$ Total current liabilities $ $300,960$

Long$-$term debt $235,125$

Net fixed assets $188,100$ Common equity $(40,441\mathrm{.}5$ shares$)404,415$

Total assets $ $940,500$ Total liabilities and equity $ $940,500$

Barry Computer Company:

Income Statement for Year Ended December $31,2021($in thousands$)$

Sales $ $1,650,000$

Cost of goods sold

Materials $$759,000$

Labor $478,500$

Heat, light, and power $49,500$

Indirect labor $99,0001,386,000$

Gross profit $ $264,000$

Selling expenses $115,500$

General and administrative expenses $33,000$

Depreciation $49,500$

Earnings before interest and taxes $($EBIT$)$ $ $66,000$

Interest expense $18,810$

Earnings before taxes $($EBT$)$ $ $47,190$

Federal and state income taxes $(25\%)11,798$

Net income $ $35,392$

Earnings per share $ $0\mathrm{.}8751$

Price per share on December $31,2021$ $ $14\mathrm{.}00$

Calculate the indicated ratios for Barry. Do not round intermediate calculations. Round your answers to two decimal places.

Ratio Barry Industry Average

Current

$\backslash$times $2\mathrm{.}47\backslash$times

Quick

$\backslash$times $1\mathrm{.}69\backslash$times

Days sales outstandinga

days $38$ days

Inventory turnover

$\backslash$times $6\mathrm{.}96\backslash$times

Total assets turnover

$\backslash$times $2\mathrm{.}05\backslash$times

Profit margin

$\%2\mathrm{.}04\%$

ROA

$\%4\mathrm{.}18\%$

ROE

$\%9\mathrm{.}72\%$

ROIC

$\%8\mathrm{.}00\%$

TIE

$\backslash$times $3\mathrm{.}48\backslash$times

Debt$/$Total capital

$\%41\mathrm{.}37\%$

M$/$B

$3\mathrm{.}40$

P$/$E

$18\mathrm{.}97$

EV$/$EBITDA

$8\mathrm{.}85$

aCalculation is based on a $365-$day year.

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

$\%2\mathrm{.}04\%$

Total assets turnover

$\backslash$times $2\mathrm{.}05\backslash$times

Equity multiplier

$\backslash$times

$\backslash$times

Select the correct option based on Barry's strengths and weaknesses as revealed by your analysis.

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.

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.

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.

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.

The firm's days sales outstanding ratio is comparable to the industry average, indicating that the firm should neither tighten cred