Question
Ratio Barry Computers Industry Averages Current Current Assets/Current Liabilities 1.98 2.0X Quick Current Assets - Inventories/Current Liabilities 1.25 1.3X Days Sales Outstanding Receivables/(Annual Sales/365) 76.3
Ratio | Barry Computers | Industry Averages | ||||
Current | Current Assets/Current Liabilities | 1.98 | 2.0X | |||
Quick | Current Assets - Inventories/Current Liabilities | 1.25 | 1.3X | |||
Days Sales Outstanding | Receivables/(Annual Sales/365) | 76.3 | 35 | days | ||
Inventory Turnover | Sales/Inventories | 6.66 | 6.7X | |||
Total Assets Turnover | Sales/Total Assets | 1.70 | 3.0X | |||
Profit Margin | Net Income/Sales | 2.3% | 1.2% | |||
ROA | Net Income/Total Assets | 3.9% | 3.6% | |||
ROE | Net Income/Common Equity | 10.2% | 9.0% | |||
ROIC | EBIT(1-T)Total Invested Capital | 7.48% | 7.5% | |||
TIE | EBIT/Interest Charges | 3.33 | 3.0X | |||
Debt/Total Capital | Total Debt/(Total Debt + Equity) | 48.5% | 47.0% | |||
M/B | Market Price/Book Value | 1.20 | 4X | |||
P/E | Price per Share/Earnings per Share | 11.79 | 17.86X | |||
EV/EBITDA | (Market Value of Equity + Market Value of Total Debt + Market Value of Other Financial Claims - Cash and Equivalents)/EBITDA | 6.64 | 9.00X | |||
Balance Sheet | Enter figures below | |||||
Cash | $77,500 | |||||
Receivables | $336,000 | |||||
Inventories | $241,500 | |||||
Total Current Assets | $655,000 | |||||
Net Fixed Assets | $292,500 | |||||
Total Assets | $947,500 | |||||
Accounts Payable | $129,000 | |||||
Other Current Liabilities | $117,000 | |||||
Notes Payable to Bank | $84,000 | |||||
Total Current Liabilities | $330,000 | |||||
Long-Term Debt | $256,500 | Shares Outstanding | ||||
Common Equity (36,100 shares) | $361,000 | 36,100 | ||||
Total Liabilities and Equity | $947,500 | |||||
Income Statement | ||||||
Sales | $1,607,500 | |||||
Cost of Goods Sold | 1,351,000 | |||||
Materials | $717,000 | |||||
Labor | $453,000 | |||||
Heat, light, and power | $68,000 | |||||
Indirect Labor | $113,000 | |||||
Depreciation | $41,500 | |||||
Gross Profit | $256,500 | |||||
Selling Expenses | 115,000 | |||||
Gen. Admin Expenses | $30,000 | |||||
EBIT | $70,000 | |||||
Interest Expense | $21,000 | |||||
EBT | $49,000 | Tax Burden | ||||
Fed and State Income Taxes (25%) | $12,250 | 25% | ||||
Net Income | $36,750 | |||||
Earnings per Share | $1.01800 | |||||
Price per Share | $12.00 | |||||
Book Value (Common Equity/Shares) | $10.00 | |||||
1: Ratio Recommendations
give and develop at least one thorough and detailed recommendation for each ratio that is appropriate for the Barry Computer Company to improve financial performance over time (over the next 3-5 years to meet industry standards).
2: Limitations of Ratio Analysis
provides a thorough and detailed assessment of limitations of the exclusive use of ratio analysis for evaluating financial performance, including any qualitative factors that could also complement the ratio analysis and play an important role in improving financial performance.
Reference and citation
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