Ratio Analysis

Problem 4-23
Ratio Analysis

Data for Barry Computer Co and its industry averages follow

Barry Computer Company:
Balance Sheet as of December 31, 2014 (In Thousands)
Cash $142,290 Accounts payable $158,100
Receivables 632,400 Other current liabilities 142,290
Inventories 379,440 Notes payable 79,050
Total current assets $1,154,130 Total current liabilities $379,440
Long-term debt $316,200
Net fixed assets 426,870 Common equity 885,360
Total assets $1,581,000 Total liabilities and equity $1,581,000
Barry Computer Company:
Income Statement for Year Ended December 31, 2014 (In Thousands)
Sales $2,550,000
Cost of goods sold
Materials $1,045,500
Labor 739,500
Heat, light, and power 127,500
Indirect labor 229,500
Depreciation 127,500 $2,269,500
Gross profit $280,500
Selling expenses 127,500
General and administrative expenses 76,500
Earnings before interest and taxes (EBIT) $76,500
Interest expense 37,944
Earnings before taxes (EBT) 38,556
Federal and state income taxes (40%) 15,422
Net income $23,134
  1. Calculate the indicated ratios for Barry Round your answers to two decimal places
    Ratio Barry Industry Average
    Current ______x 301x
    Quick _______x 202x
    Days sales outstandinga _______days 4230days
    Inventory turnover _______x 705x
    Total assets turnover _______x 182x
    Profit margin ______% 085%
    ROA ______% 154%
    ROE ______ % 290%
    ROIC _____ % 740%
    TIE _____x 310x
    Debt/Total capital ______ % 4850%

    aCalculation is based on a 365-day year

  2. Construct the Du Pont equation for both Barry and the industry Round your answers to two decimal places
    Profit margin ____% 085%
    Total assets turnover _____ x 182x
    Equity multiplier


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