Prepare a performance report on Barry Computer Company. (Problem 4-23 on pages 131-132 of the course text
Question:
Prepare a performance report on Barry Computer Company. (Problem 4-23 on pages 131-132 of the course text provides a balance sheet and an income statement for the company.)
Prepare your performance report to show calculations for the eleven ratios listed on page 131-132, as well as a comparison of your computed ratios with the listed industry averages.
I PREPARED THE REPORT BELOW
Ratio | Formula | The year 2015 | Industry average |
Current Ratio | Current Assets / Current Liabilities | 2.0 | 2 |
Current Assets | 655000.00 | ||
Current Liabilities | 330000.00 | ||
Quick ratio | Cash+ Short term Investment +Receivables net) / Current Liability | 1.3 | 1.3 |
Cash | 77500.00 | ||
Short term Investments | 0.00 | ||
Receivables | 336000.00 | ||
Current Liabilities | 330000.00 | ||
Days Sales outstanding | Average accounts receivable*365/Sales Revenue | 76 | 35 |
Net Sales revenue | 1607500.00 | ||
Average accounts receivable | 336000.00 | ||
Inventory Turnover | Cost of Goods Sold/ Average Inventory | 5.8 | 6.7 |
Cost of Goods Sold | 1392500.00 | ||
Average Inventory | 241500.00 | ||
Asset turnover | Total Revenue/Average total Assets | 2 | 3 |
Total Revenue | 1607500.00 | ||
Average total Assets | 947500.00 | ||
Net Profit Margin | Net Income/Total Revenue | 1.70% | 1.20% |
Net income | 27300.00 | ||
Total Revenue | 1607500.00 | ||
Return on asset | Net income/Total assets | 2.9% | 3.60% |
Net Income | 27300.00 | ||
Total Assets | 947500.00 | ||
Return on equity | Net income/Average Stockholder's Equity | 8% | 9% |
Net Income | 27300.00 | ||
Average Stockholder's Equity | 361000.00 | ||
Return on capital invested | Net Income - dividend/Total Capital | 2.88% | 7.50% |
Net Income | 27300.00 | ||
Dividend | 0 | ||
Total Capital | 947500.00 | ||
Time Interest earned | (Net Income +Interest+ Income Tax expense)/Interest Expense | 3 | 3 |
Net income | 27300.00 | ||
Interest Expense | 24500.00 | ||
Income Tax Expense | 18200.00 | ||
Debt to total capital | Total Liabilities/Total capital | 62% | 47% |
Total Liabilities | 586500.00 | ||
Total capital | 947500.00 |
Write a (1-2 PAGES IN LENGTH) memo to your supervisor explaining your findings and your recommendations for improvement.
Suggest some ways in which the company can plan to improve below industry average ratio performance.
Explain why your recommendations would be effective.
Be sure to list your computations in an appendix to your report.
Managerial Accounting
ISBN: 978-0078111006
14th edition
Authors: Ray Garrison, Eric Noreen and Peter Brewer