Problem 4-22 Ratio Analysis

Data for Barry Computer Co. and its industry averages follow.

Barry Computer Company:
Balance Sheet as of December 31, 2011 (In Thousands)
Cash	$100,800		Accounts payable	$100,800
Receivables	201,600		Notes payable	57,600
Inventories	144,000		Other current liabilities	64,800
Total current assets	$446,400		Total current liabilities	$223,200
			Long-term debt	$144,000
Net fixed assets	273,600		Common equity	352,800
Total assets	$720,000		Total liabilities and equity	$720,000

Barry Computer Company: Income Statement for Year Ended December 31, 2011 (In Thousands)
Sales			$1,000,000
Cost of goods sold
Materials	$410,000
Labor	220,000
Heat, light, and power	40,000
Indirect labor	110,000
Depreciation	30,000		$810,000

Gross profit		$190,000
Selling expenses		50,000
General and administrative expenses		10,000
Earnings before interest and taxes (EBIT)		$130,000
Interest expense		17,280
Earnings before taxes (EBT)		112,720
Federal and state income taxes (40%)		45,088
Net income		$67,632

1. Calculate the indicated ratios for Barry. Round your answers to two decimal places.

   Ratio	Barry	Industry Average
   Current	x	1.90x
   Quick	x	1.29x
   Days sales outstandinga	days	35.04days
   Inventory turnover	x	7.44x
   Total assets turnover	x	1.62x
   Net profit margin	%	6.44%
   ROA	%	10.44%
   ROE	%	21.30%
   Total debt/total assets	%	50.98%

   ^aCalculation is based on a 365-day year.
2. Construct the extended Du Pont equation for both Barry and the industry. Round your answers to two decimal places.

   	FIRM	INDUSTRY
   Net profit margin	%	6.44%
   Total assets turnover	x	1.62x
   Equity multiplier