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
   

   FIRM	INDUSTRY
   Profit margin	____%	085%
   Total assets turnover	_____ x	182x
   Equity multiplier

Solution: