Tents ack to Assignment Attempts 5 Keep the Highest 5 / 20 7. Problem 4.23 (Ratio Analysis) eBook 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 $ 129,250 Accounts payable 168.025 Recelvables 465,300 Other current liabilities 116,325 Inventories 336,050 Notes payable to bank 103,400 Total current assets $ 930,000 Total current abilities $ 387.750 Long-term debt 254150 Net fixed assets 361,900 Common equity (62.040 shares) 620,400 $1,292,500 Total assets 51,292,500 Total abilities and equity Barry Computer Company Income Statement for Year Ended December 31, 2019 (in Thousands) Sales 32,350.000 Cost of goods sold Materials 51104500 511,000 OM Ch 04: End-of-Chapter Problems - Analysis of Financial Statements $1,292,500 TOlal assets $1,292,300 Total Tables and equity Barry Computer Company: Income Statement for Year Ended December 31, 2019 (In Thousands) Sales $2,350,000 Cost of goods sold Materials $1,104,500 Labor 611,000 Heat, light, and power 94,000 Indirect labor 188,000 Depreciation 117,500 2,115,000 Gross profit $ 235,000 Selling expenses 117,500 General and administrative expenses 23,500 Earnings before interest and taxes (EBIT) $ 94,000 Interest expense 25,592 Earnings before taxes (EBT) $ 68,408 Federal and state income taxes (25%) 17,102 Net income 51,306 Earnings per share $ 0.8270 Price per share on December 31, 2019 s 11.00 Sry S a. Calculate the indicated ratios for Barry. Do not round Intermediate calculations. Round your answers to tw Ratio Barry Industry Average Current 2.45 Quick 1.56 andina davs 34 days Price per share on December 31, 2019 $ 11.00 X a. Calculate the indicated ratios for Barry. Do not round intermediate calculations. Round your answers to two decimal places. Ratio Barry Industry Average Current 2.45X Quick 1.56% Days sales outstanding days 34 days Inventory turnover X 7.49% Total assets turnover 2.01% Profit margin 96 2.08% ROA 90 4.189 ROE % 9.1996 ROIC 7.4096 TIE 3.60 Debt/Total capital 9 37.36% M/B 4.10 P/E 15.85 EV/EBITDA 7.37 ***** Calculation is based on a 365-day year b. Construct the DuPont equation for both Barty and the industry. Do not round intermediate calculations. Round your answers to two decimal places INDUSTRY Profit margin 2,089 Total assets turnover 2.01 Equity, multiplier FIRM strengths and weaknesses as revealed by your analysis Select the correct option based on Barry's strengths and weaknesses as revealed by your analysis. I. 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. II. 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 loverage is similar to others in the industry. 111. The firm's days sales outstanding ratio is comparable to the industry average Indicating that the firm should neither tighten credit noe enforce a more 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, as 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 a below average oudity position and financial leverage is similar to others in the industry TV. 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 alven 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 finandal leverage is similar to others in the industry. V. 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 to 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 industrynet Income should be higher glven the amount of equity assets, and invested capital. However the company seems to be in an average louidity position and financial leverage is similar to others in the industry Select d. Suppose Barry had doubled its sales as well as its inventories, accounts receivable and common equity during 2019. How would 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 1. If 2019 represents a period of normal growth for the firm ratios based on this year will be accurate and a comparison between them and industry main Potential investors who look only at 2019 ratios will be mised, and a ton to super normal conditionin