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What are the calculations for the 14 ratios listed? How do the computed ratios compare with the listed industry averages? In what ways can Barry

What are the calculations for the 14 ratios listed?

How do the computed ratios compare with the listed industry averages?

In what ways can Barry Computer Company improve below industry average ratio performance?

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4-23 RATIO ANALYSIS 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 dol- lars are in thousands, number of shares are shown in thousands too. a, Calculate the indicated ratios for Barry. b. Construct the DuPont equation for both Barry and the industry. c. Outline Barry's strengths and weaknesses as revealed by your analysis. d. Suppose Barry had doubled its sales as well as its inventories, accounts receivable, and common equity during 2018. 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.) Barry Computer Company: Balance Sheet as of December 31, 2018 (in Thousands) Ratio Barry Industry Average Cash $ 77,500 Accounts payable $129,000 Current 2.0X Receivables 336,000 Other current liabilities 117,000 Quick 1.3X Inventories 241,500 Notes payable to bank 84,000 Days sales outstanding* 35 days Total current assets $ 655,000 Total current liabilities $330,000 6.7X Long-term debt 256,500 Inventory turnover Net fixed assets 292,500 Common equity (36,100 shares) 361,000 Total assets turnover 3.0X Total assets $ 947,500 Total liabilities and equity $947,500 Profit margin 1.29% Barry Computer Company: Income Statement for Year Ended ROA 3.6% December 31, 2018 (in Thousands) ROE 9.0% Sales $1,607,500 ROIC 7.5% Cost of goods sold TIE 3.0X Materials $717,000 Debt/Total capital 47.0% Labor 453,000 M/B 4.22 Heat, light, and power 68,000 P/E 17.86 Indirect labor 113,000 EV/EBITDA 9.14 Depreciation 41,500 1,392,500 Calculation is based on a 365-day year. Gross profit $ 215,000 Selling expenses 115,000 General and administrative expenses 30,000 Earnings before interest and taxes (EBIT) 70,000 Interest expense 24,500 Earnings before taxes (EBT) 45,500 Federal and state income taxes (40%) 18,200 Net income $ 27,300 Earnings per share $ 0.75623 Price per share on December 31, 2018 12.00

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