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 |
- 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
- 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:
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