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 $ 129,870 Accounts payable $ 158,730 Receivables 476,190 Other current liabilities 173,160 Inventories 432,900 Notes payable to bank 158,730 Total current assets $ 1,038,960 Total current liabilities $ 490,620 Long-term debt 418,470 Net fixed assets 404,040 Common equity (53,391 shares) 533,910 Total assets $ 1,443,000 Total liabilities and equity $ 1,443,000 Barry Computer Company:Income Statement for Year Ended December 31, 2019 (In Thousands) Sales $ 1,950,000 Cost of goods sold Materials $897,000 Labor 585,000 Heat, light, and power 117,000 Indirect labor 97,500 Depreciation 39,000 1,735,500 Gross profit $ 214,500 Selling expenses 97,500 General and administrative expenses 19,500 Earnings before interest and taxes (EBIT) $ 97,500 Interest expense 29,293 Earnings before taxes (EBT) $ 68,207 Federal and state income taxes (25%) 17,052 Net income $ 51,155 Earnings per share $ 0.9581 Price per share on December 31, 2019 $ 11.00 Calculate the indicated ratios for Barry. Do not round intermediate calculations. Round your answers to two decimal places. Ratio Barry Industry Average Current × 2.08 × Quick × 1.29 × Days sales outstandinga days 42 days Inventory turnover × 4.73 × Total assets turnover × 1.61 × Profit margin % 2.45 % ROA % 3.94 % ROE % 10.65 % ROIC % 7.50 % TIE × 3.43 × Debt/Total capital % 53.45 % M/B 5.10 P/E 14.26 EV/EBITDA 9.92 aCalculation is based on a 365-day year. Construct the DuPont equation for both Barry and the industry. Do not round intermediate calculations. Round your answers to two decimal places. FIRM INDUSTRY Profit margin % 2.45% Total assets turnover × 1.61× Equity multiplier × × Select the correct option based on Barry's strengths and weaknesses as revealed by your analysis. 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 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 average liquidity position and financial leverage is similar to others in the industry. 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. 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 leverage is similar to others in the industry. The firm's days sales outstanding ratio is comparable to the industry average, indicating that the firm should neither tighten credit nor 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, 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 a below average liquidity position and financial leverage is similar to others in the industry.
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 $ 129,870 Accounts payable $ 158,730 Receivables 476,190 Other current liabilities 173,160 Inventories 432,900 Notes payable to bank 158,730 Total current assets $ 1,038,960 Total current liabilities $ 490,620 Long-term debt 418,470 Net fixed assets 404,040 Common equity (53,391 shares) 533,910 Total assets $ 1,443,000 Total liabilities and equity $ 1,443,000 Barry Computer Company:Income Statement for Year Ended December 31, 2019 (In Thousands) Sales $ 1,950,000 Cost of goods sold Materials $897,000 Labor 585,000 Heat, light, and power 117,000 Indirect labor 97,500 Depreciation 39,000 1,735,500 Gross profit $ 214,500 Selling expenses 97,500 General and administrative expenses 19,500 Earnings before interest and taxes (EBIT) $ 97,500 Interest expense 29,293 Earnings before taxes (EBT) $ 68,207 Federal and state income taxes (25%) 17,052 Net income $ 51,155 Earnings per share $ 0.9581 Price per share on December 31, 2019 $ 11.00 Calculate the indicated ratios for Barry. Do not round intermediate calculations. Round your answers to two decimal places. Ratio Barry Industry Average Current × 2.08 × Quick × 1.29 × Days sales outstandinga days 42 days Inventory turnover × 4.73 × Total assets turnover × 1.61 × Profit margin % 2.45 % ROA % 3.94 % ROE % 10.65 % ROIC % 7.50 % TIE × 3.43 × Debt/Total capital % 53.45 % M/B 5.10 P/E 14.26 EV/EBITDA 9.92 aCalculation is based on a 365-day year. Construct the DuPont equation for both Barry and the industry. Do not round intermediate calculations. Round your answers to two decimal places. FIRM INDUSTRY Profit margin % 2.45% Total assets turnover × 1.61× Equity multiplier × × Select the correct option based on Barry's strengths and weaknesses as revealed by your analysis. 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 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 average liquidity position and financial leverage is similar to others in the industry. 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. 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 leverage is similar to others in the industry. The firm's days sales outstanding ratio is comparable to the industry average, indicating that the firm should neither tighten credit nor 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, 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 a below average liquidity position and financial leverage is similar to others in the industry.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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: | ||||||
Cash | $ | 129,870 | Accounts payable | $ | 158,730 | |
Receivables | 476,190 | Other current liabilities | 173,160 | |||
Inventories | 432,900 | Notes payable to bank | 158,730 | |||
Total current assets | $ | 1,038,960 | Total current liabilities | $ | 490,620 | |
Long-term debt | 418,470 | |||||
Net fixed assets | 404,040 | Common equity (53,391 shares) | 533,910 | |||
Total assets | $ | 1,443,000 | Total liabilities and equity | $ | 1,443,000 |
Barry Computer Company: Income Statement for Year Ended December 31, 2019 (In Thousands) |
||||
Sales | $ | 1,950,000 | ||
Cost of goods sold | ||||
Materials | $897,000 | |||
Labor | 585,000 | |||
Heat, light, and power | 117,000 | |||
Indirect labor | 97,500 | |||
|
39,000 | 1,735,500 |
Gross profit | $ | 214,500 | |
Selling expenses | 97,500 | ||
General and administrative expenses | 19,500 | ||
Earnings before interest and taxes (EBIT) | $ | 97,500 | |
Interest expense | 29,293 | ||
Earnings before taxes (EBT) | $ | 68,207 | |
Federal and state income taxes (25%) | 17,052 | ||
Net income | $ | 51,155 | |
Earnings per share | $ | 0.9581 | |
Price per share on December 31, 2019 | $ | 11.00 |
- Calculate the indicated ratios for Barry. Do not round intermediate calculations. Round your answers to two decimal places.
Ratio Barry Industry Average Current × 2.08 × Quick × 1.29 × Days sales outstandinga days 42 days Inventory turnover × 4.73 × Total assets turnover × 1.61 × Profit margin % 2.45 % ROA % 3.94 % ROE % 10.65 % ROIC % 7.50 % TIE × 3.43 × Debt/Total capital % 53.45 % M/B 5.10 P/E 14.26 EV/EBITDA 9.92
aCalculation is based on a 365-day year. - Construct the DuPont equation for both Barry and the industry. Do not round intermediate calculations. Round your answers to two decimal places.
FIRM INDUSTRY Profit margin % 2.45% Total assets turnover × 1.61× Equity multiplier × × - Select the correct option based on Barry's strengths and weaknesses as revealed by your analysis.
- 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 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 average liquidity position and financial leverage is similar to others in the industry.
- 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.
- 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 leverage is similar to others in the industry.
- The firm's days sales outstanding ratio is comparable to the industry average, indicating that the firm should neither tighten credit nor 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, 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 a below average liquidity position and financial leverage is similar to others in the industry.
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