Data for Barry Computer Company and its industry averages follow. a. Calculate the indicated ratios for Barry.
Question:
Data for Barry Computer Company and its industry averages follow.
a. Calculate the indicated ratios for Barry.
b. Construct the extended Du Pont 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 2004. How would that information affect the validity of your ratio analysis? Think about averages and the effects of rapid growth on ratios if averages are not used. No calculations are needed.
Barry Computer Company: Balance Sheet as of December 31, 2004 (In Thousands) $ 77,500 Cash Acconnes payable Notes payable $129,000 Receivables 336,000 84,000 Inventories 241,500 $655,000 Other current liabilities 117,000 $330,000 Total current assets Total current liabilitics Net fixed assets Long-term debt 292,500 256,500 Common equity Total liabilities and equity 361,000 $947,500 $947,500 Total assets Barry Computer Company: Income Statement for Year Ended December 31, 2004 (In Thousands) Sales $1,607,500 1,392,500 145,000 $ 70,000 Cost of goods sold Selling, general, and administrative expenses Earnings before interest and taxes (EBIT) Interest expense 24.500 $ 45,500 Earnings before taxes (EBT) Federal and state income taxes (40%) 18,200 $ 27,300 Net income Ratio Barry Industry Average Current assets/current liabilities Days sales outstanding Sales/inventory Sales/fixed assets 2.0x 35 days 6.7x 12.1x Sales/total assets 3.0x Net income/sales 1.2% 3.6% 9.0% Net income/total assets Net income/common equity Total debtitotal assets 60.0% *Calculation is based on a 365-day year.
Step by Step Answer:
a Dollar amounts in thousands b For the firm To find the industry ratio of assets to common equity r...View the full answer
Financial management theory and practice
ISBN: 978-0324422696
12th Edition
Authors: Eugene F. Brigham and Michael C. Ehrhardt
Related Video
The Dupont analysis is an expanded return on equity formula, calculated by multiplying the net profit margin by the asset turnover by the equity multiplier. The DuPont analysis is also known as the DuPont identity or DuPont model.This Video will guide on how to calculate return on Equity and estimate profitability of shareholders using DuPont Analysis.
Students also viewed these Finance questions
-
Data for Campsey Computer Company and its industry averages follow. a. Calculate the indicated ratios for Campsey. b. Construct the DuPont equation for both Campsey and the industry. c. Outline...
-
Data for Campsey Computer Company and its industry averages follow. a. Calculate the indicated ratios for Campsey. b. Construct the DuPont equation for both Campsey and the industry. c. Outline...
-
Data for Lozano Chip Company and its industry averages follow. a. Calculate the indicated ratios for Lozano. b. Construct the extended DuPont equation for both Lozano and the industry. c. Outline...
-
For the planning process, it is helpful to have employee census information for Question 3 options: a) at least the last five years and projections for the future. b) all current employees younger...
-
Calculate the number of vacancies per cubic meter at 1000C for a metal that has an energy for vacancy formation of 1.22 eV/atom, a density of 6.25 g/cm3, and an atomic weight of 37.4 g/mol. (A) 1.49 ...
-
There are three general strategies for changing attitudes. Explain each, using, for illustration, consumers attitudes toward a fast-food chain of your choice (McDonalds, Burger King, KFC, etc.).
-
How suitable are legal restrictions in the following cases? (a) Ensuring adequate vehicle safety (e.g. tyres with sufficient tread or roadworthy vehicles). (b) Reducing traffic congestion. (c)...
-
Recording Transactions in T-Accounts, Preparing the Balance Sheet, and Evaluating the Current Ratio Cougar Plastics Company has been operating for three years. At December 31, 2011, the accounting...
-
i) Suppose that there are three European Call options with same maturity on the same underlying asset. The underlying asset will have a spot price of S7 at maturity. The call option prices are c, C2...
-
Parent Company owns 60 percent of the voting common stock of the Subsidiary Inc. On January 1, 2019, the Subsidiary sold ten-year bonds with a face value of $560,000 to the public for $604,000. The...
-
The H. R. Pickett Corporation has $500,000 of debt outstanding, and it pays an interest rate of 10 percent annually: Picketts annual sales are $2 million, its average tax rate is 30 percent, and its...
-
Complete the balance sheet and sales information in the table that follows for Hoffmeister Industries using the following financial data: Debt ratio: 50% Quick ratio: 0.80X Total assets turnover:...
-
The unit of measure used in Canadian financial statements is the nominal dollar. What is a nominal dollar? What real economic costs are ignored by using a nominal dollar as the unit of measure,...
-
Suppose two children push horizontally, but in exactly opposite directions, on a third child in a sled. The first child exerts a force of 78 N, the second a force of 93 N, kinetic friction is 5.5 N,...
-
calculate the return of stock X in May and June 6. The prices of Stock X are: Date 4/30/2019 5/31/2019 6/28/2019 Stock X $164.43 $161.33 $173.55 Calculate the returns of Stock X in May and June of...
-
A 1500 Watt space heater will draw 12.5 Amps (12.5 A) when plugged into a 120 V line. a) What is the heater's resistance? b) How much charge passes through the heater in 15 minutes? (Assume direct...
-
Evaluate lim h0 where f(x) = 7x + 8. If the limit does not exist enter DNE. Limit= f(8+h)-f(8) h
-
A rescue pilot drops a survival kit while her plane is flying at an altitude of 200.0m with a forward velocity of 100.0 m/s. If air friction is disregarded, how far in advance of the starving...
-
What two overall features do managers prefer currencies and exchange rates to embody?
-
Draw two scatterplots, one for which r = 1 and a second for which r = 21.
-
Prior to 1981, the government imposed only a 67 percent (instead of a 100 percent) marginal tax rate on income earned by a mother receiving AFDC. Draw the budget constraint before 1981 and after...
-
On the basis of your answers to Problems 25-1 and 25-2, if Hastings were to acquire Vandell, what would be the range of possible prices that it could bid for each share of Vandell common stock?...
-
Define each of the following terms: a. Multinational corporation b. Exchange rate; fixed exchange rate system; floating exchange rates c. Trade deficit; devaluation; revaluation d. Exchange rate...
-
Define each of the following terms: a. Multinational corporation b. Exchange rate; fixed exchange rate system; floating exchange rates c. Trade deficit; devaluation; revaluation d. Exchange rate...
-
Choose the response that accurately completes the following sentence. To meet one of the due diligence requirements of a paid tax preparer, it is not enough to ask more questions; tax preparers must...
-
Are you aware of any organization that actually empowers employees or do they simply give power to people? What's the difference? Explain.
-
Complete the table below for y=-2. Then use two of the ordered pairs to graph the equation. NOTE!!! Do not plot ordered pairs using the point tool. Use the line tool to select the two ordered pairs...
Study smarter with the SolutionInn App