Ratios for Barry: Current 1.98x industry 2.0x; Quick 1.25x Industry 1.3x - DSO 76 days Industry 35 days. Inventory turnover 6.66x industry 6.7x - Total Assets 1.7x industry 3.0x - Profit Margin 1.7x industry 1.2x, ROA2.9% Industry 3.6% ROE 7.6% industry 9% , ROIC 4.4% industry 7.5% TIE 1.7x industry 3.0x DEBT/T ASSETS 62% industry 47%

DSO is higher than the industry average. Twice more compare with the industry. Barry needs to make bigger efforts to collect its accounts. He probably has some accounts that he never collects and they are inflating its actual number and cause ROE to be higher. His debt/assets is too high and banks would consider him risky at the point to consider lend him substantial amount. He could consider financing through common equity.

Question: Suppose Barry had doubled its sales as well as its inventory, accounts receivable, and common equity during 2014, How 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.