Ratio Analysis: 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 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, account receivable, and common equity during 2012. 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, 2012 (in thousands)

Cash 77,500 Accounts Payable 129,000

Receivables 336,000 Notes Payable 84,000

Inventories 241,500 Other Current Liabilities 117,000

Total Current Assets 655,000 Total Current liabilities 330,000

Long term debt 256,500

Net fixed assets 292,500 Common Equity 361,000

Total Assets 947,500 Total Liabilities and Equity 947,500

Barry Computer Company: Income Statement for Year Ended December 31, 2012 (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

Depreciation 41,500 1,392,500

Gross Profit 215,000

Selling Expenses 115,000

General and Admin Expense 30,000

Earnings before interest and taxes 70,000

Interest Expense 24,500

Earnings before taxes 45,500

Federal and State Income Taxes (40%) 18,200

Net Income 27,300

Ratio Barry Industry Average

Current _____ 2.0x

Quick ______ 1.3x

Days sales outstanding ______ 35 days

Inventory Turnover ______ 6.7x

Total assets turnover ______ 3.0x

Profit margin ______ 1.2%

ROA ______ 3.6%

ROE ______ 9.0%

Total debt/total assets ______ 60.0%

Calculation is based on a 365-day year