Data for Barry Computer Co. and its industry averages follow. a. Calculate the indicated ratios for Barry. b. Construct the DuPont equation for both Barry
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 2016. 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.)
Barry Computer Company: Balance Sheet as of December 31, 2016 (in Thousands) $ 77,500 Cash Accounts payable $129,000 Receivables 336,000 Other current liabilities 117,000 Inventories 241,500 $655,000 Notes payable to bank 84,000 Total current assets Total current liabilities $330,000 Long-term debt 256,500 Common equity Net fixed assets 292,500 $947,500 361,000 Total liabilities and equity Total assets $947,500 Barry Computer Company: Income Statement for Year Ended December 31, 2016 (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 41,500 1,392,500 Depreciation Gross profit Selling expenses $ 215,000 115,000 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 %24 27,300
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a Dollar amounts in thousands b For the firm ROE NIS STA X TAE 17 17 947500361000 76 For the industr... View full answer
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Fundamentals of Financial Management
Authors: Eugene F. Brigham
Concise 9th Edition
1305635937, 1305635930, 978-1305635937
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