Ratio		Barry Computers	Industry Averages
Current	Current Assets/Current Liabilities	1.98	2.0X
Quick	Current Assets - Inventories/Current Liabilities	1.25	1.3X
Days Sales Outstanding	Receivables/(Annual Sales/365)	76.3	35	days
Inventory Turnover	Sales/Inventories	6.66	6.7X
Total Assets Turnover	Sales/Total Assets	1.70	3.0X
Profit Margin	Net Income/Sales	2.3%	1.2%
ROA	Net Income/Total Assets	3.9%	3.6%
ROE	Net Income/Common Equity	10.2%	9.0%
ROIC	EBIT(1-T)Total Invested Capital	7.48%	7.5%
TIE	EBIT/Interest Charges	3.33	3.0X
Debt/Total Capital	Total Debt/(Total Debt + Equity)	48.5%	47.0%
M/B	Market Price/Book Value	1.20	4X
P/E	Price per Share/Earnings per Share	11.79	17.86X
EV/EBITDA	(Market Value of Equity + Market Value of Total Debt + Market Value of Other Financial Claims - Cash and Equivalents)/EBITDA	6.64	9.00X
Balance Sheet	Enter figures below
Cash	$77,500
Receivables	$336,000
Inventories	$241,500
Total Current Assets	$655,000
Net Fixed Assets	$292,500
Total Assets	$947,500
Accounts Payable	$129,000
Other Current Liabilities	$117,000
Notes Payable to Bank	$84,000
Total Current Liabilities	$330,000
Long-Term Debt	$256,500	Shares Outstanding
Common Equity (36,100 shares)	$361,000	36,100
Total Liabilities and Equity	$947,500
Income Statement
Sales	$1,607,500
Cost of Goods Sold	1,351,000
Materials	$717,000
Labor	$453,000
Heat, light, and power	$68,000
Indirect Labor	$113,000
Depreciation	$41,500
Gross Profit	$256,500
Selling Expenses	115,000
Gen. Admin Expenses	$30,000
EBIT	$70,000
Interest Expense	$21,000
EBT	$49,000	Tax Burden
Fed and State Income Taxes (25%)	$12,250	25%
Net Income	$36,750
Earnings per Share	$1.01800
Price per Share	$12.00
Book Value (Common Equity/Shares)	$10.00

1: Ratio Recommendations

give and develop at least one thorough and detailed recommendation for each ratio that is appropriate for the Barry Computer Company to improve financial performance over time (over the next 3-5 years to meet industry standards).

2: Limitations of Ratio Analysis

provides a thorough and detailed assessment of limitations of the exclusive use of ratio analysis for evaluating financial performance, including any qualitative factors that could also complement the ratio analysis and play an important role in improving financial performance.

Reference and citation

Answer rating: 100% (QA)

ANSWER Ratio Recommendations Current Ratio The current ratio indicates Barry Computers ability to cover its shortterm liabilities with its current assets While Barry Computers current ratio of 198 is ... View the full answer