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Prepare a performance report on Barry Computer Company. (Problem 4-23 on pages 131-132 of the course text provides a balance sheet and an income statement

Prepare a performance report on Barry Computer Company. (Problem 4-23 on pages 131-132 of the course text provides a balance sheet and an income statement for the company.)

Prepare your performance report to show calculations for the eleven ratios listed on page 131-132, as well as a comparison of your computed ratios with the listed industry averages.

I PREPARED THE REPORT BELOW

Ratio

Formula

The year 2015

Industry average

Current Ratio

Current Assets / Current Liabilities

2.0

2


Current Assets

655000.00



Current Liabilities

330000.00






Quick ratio

Cash+ Short term Investment +Receivables net) / Current Liability

1.3

1.3


Cash

77500.00



Short term Investments

0.00



Receivables

336000.00



Current Liabilities

330000.00






Days Sales outstanding

Average accounts receivable*365/Sales Revenue

76

35


Net Sales revenue

1607500.00



Average accounts receivable

336000.00






Inventory Turnover

Cost of Goods Sold/ Average Inventory

5.8

6.7


Cost of Goods Sold

1392500.00



Average Inventory

241500.00






Asset turnover

Total Revenue/Average total Assets

2

3


Total Revenue

1607500.00



Average total Assets

947500.00






Net Profit Margin

Net Income/Total Revenue

1.70%

1.20%


Net income

27300.00



Total Revenue

1607500.00






Return on asset

Net income/Total assets

2.9%

3.60%


Net Income

27300.00



Total Assets

947500.00






Return on equity

Net income/Average Stockholder's Equity

8%

9%


Net Income

27300.00



Average Stockholder's Equity

361000.00






Return on capital invested

Net Income - dividend/Total Capital

2.88%

7.50%


Net Income

27300.00



Dividend

0



Total Capital

947500.00






Time Interest earned

(Net Income +Interest+ Income Tax expense)/Interest Expense

3

3


Net income

27300.00



Interest Expense

24500.00



Income Tax Expense

18200.00






Debt to total capital

Total Liabilities/Total capital

62%

47%


Total Liabilities

586500.00



Total capital

947500.00





Write a (1-2 PAGES IN LENGTH) memo to your supervisor explaining your findings and your recommendations for improvement.

Suggest some ways in which the company can plan to improve below industry average ratio performance.

Explain why your recommendations would be effective.

Be sure to list your computations in an appendix to your report.


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