Ratio analysis Data for Barry Computer Co. and its industry averages follow. Calculate the indicated ratios for
Question:
- Ratio analysis Data for Barry Computer Co. and its industry averages follow.
- Calculate the indicated ratios for Barry.
- Outline Barry’s strengths and weaknesses as revealed by your analysis, by indicating on each ratio, whether Barry is higher or lower than the industry average, and write is this good or bad.
Barry Computer Company Balance Sheet as of December 31, 2005 (in thousands)
Cash $ 0 Accounts payable $200,000
Receivables 200,000 Notes payable 100,000
Inventories 200,000 Other current liabilities 200.000
Total current assets 400,000 Total current liabilities 500,000
Long-term debt 400,000
Net fixed assets 600,000 Common equity 100.000
Total assets 1,000,000 Total liabilities and equity 1,000,000
Barry Computer Company: Income Statement for Year Ended December 31, 2005 (in Thousands)
Sales $1,000,000
Cost of goods sold
Materials 400,000
Labor 300,000
Heat, light, and power 50,000
Indirect labor 100,000
Depreciation 50,000 900,000
Gross profit 100,000
Selling expenses 60,000
General and administrative expenses 30,000
Earnings before interest and taxes (EBIT) 10,000
Interest expense 10,000
Earnings before taxes (EBT) 0
Federal and state income taxes (40 percent) 0
Net income 0
Higher or
Lower Good or Industry
Ratio Barry (><) Bad Average
Current _____ _____ _____ 2.0X
Quick _____ _____ _____ 1.3X
Days sales outstanding _____ _____ _____ 35 days
Inventory turnover _____ _____ _____ 6.7X
Total assets turnover _____ _____ _____ 3.0X
Net profit margin _____ _____ _____ 1.2%
ROA _____ _____ _____ 3.6%
ROE _____ _____ _____ 9.0%
Total debt/total assets _____ _____ _____ 60%
Expert Answer:
Balance sheet and income statement are not properly adjusted in question thats why these are adjuste... View the full answer
Fundamentals of Financial Management
ISBN: 978-1305635937
Concise 9th Edition
Authors: Eugene F. Brigham
