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. a. Calculate the indicated ratios for Barry.
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. a. Calculate the indicated ratios for Barry.
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. a. Calculate the indicated ratios for Barry.
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 dollars 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.)
Transcribed Image Text:Barry Computer Company:
Balance Sheet as of December 31, 2018 (In Thousands)
$ 77,500
Accounts payable
Cash
$129,000
Receivables
336,000
Other current liabilities
117,000
Inventories
241,500
$ 655,000
Notes payable to bank
Total current liabilities
84,000
$330,000
Total current assets
Long-term debt
256,500
Net fixed assets
292,500
$ 947,500
Common equity (36,100 shares)
Total liabilities and equity
361,000
$947,500
Total assets
December 31, 2018 (In Thousands)
Sales
$1,607,500
Cost of goods sold
Materials
$717,000
Labor
453,000
Heat, light, and power
68,000
Indirect labor
113,000
Depreciation
41,500
1,392,500
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
Eamings per share
0.75623
Price per share on December 31, 2018
$ 12.00
Ratio
Barry
Industry Average
Current
2.0x
Quick
1.3x
Days sales outstanding
Inventory turnover
35 days
6.7x
Total assets turnover
3.0х
Profit margin
1.2%
ROA
3.6%
ROE
9.0%
ROIC
7.5%
TIE
3.0х
Debt/Total capital
47.0%
M/B
4.22
P/E
17.86
EV/EBITDA
9.14
Calculation is based on a 365-day year.
Definition Definition Money that the business will be receiving from its clients who have utilized the credit provided to buy its goods and services. The credit period typically lasts for a short term, lasting from a few days, a few months, to a year.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
