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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...

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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

Answered Same Day Dec 24, 2021

Solution

David answered on Dec 24 2021
113 Votes
Answer1.
Cu
ent Ratio = Cu
ent Asset/Cu
ent Liabilities
= 446400/223200 =2x
Quick Ratio = (Cash + A/C Receivable )/Cu
ent Liabilities
=(100800 + 201,600)/223200= 1.35x
Days Sales Outstanding Days = 365/Account Receivable ratio
365/(Credit Sales/Account Receivable)
=365/(1000000/201600) = 73.58 Days
Inventory Turnover ratio = COGS/Average Inventory
=...
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