FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Data for Barry Computer Co. and its industry averages follow. The firm's debt is priced at par, so the market value of its debt equals its book value. Since dollars are in thousands, number of shares are shown in thousands too.

Barry Computer Company:
Balance Sheet as of December 31, 2018 (In Thousands)
 
Cash $224,250   Accounts payable $207,000
Receivables 621,000   Other current liabilities 207,000
Inventories 448,500   Notes payable to bank 207,000
   Total current assets $1,293,750      Total current liabilities $621,000
      Long-term debt $345,000
Net fixed assets 431,250   Common equity (75,900 shares) 759,000
Total assets $1,725,000   Total liabilities and equity $1,725,000

 

Barry Computer Company:
Income Statement for Year Ended December 31, 2018 (In Thousands)
 
Sales     $2,300,000
Cost of goods sold      
   Materials $1,035,000    
   Labor 552,000    
   Heat, light, and power 161,000    
   Indirect labor 207,000    
   Depreciation 46,000   2,001,000
Gross profit $ 299,000
Selling expenses   115,000
General and administrative expenses $ 69,000
   Earnings before interest and taxes (EBIT) $ 115,000
Interest expense   27,600
   Earnings before taxes (EBT) $ 87,400
Federal and state income taxes (40%)   34,960
Net income $ 52,440
Earnings per share $ 0.69091
Price per share on December 31, 2018 $ 14.00

 

  1. Calculate the indicated ratios for Barry. Round your answers to two decimal places.
    Ratio Barry              Industry Average
    Current x 2.05x
    Quick x 1.39x
    Days sales outstandinga days 46.93 days
    Inventory turnover x 5.49x
    Total assets turnover x 1.47x
    Profit margin  % 2.17%
    ROA  % 3.20%
    ROE  % 7.35%
    ROIC  % 7.10%
    TIE x 4.27x
    Debt/Total capital  % 43.61%
    M/B  % 4.40%
    P/E  % 22.65%
    EV/EBITDA  % 10.82%

    aCalculation is based on a 365-day year.

  2. Construct the DuPont equation for both Barry and the industry. Round your answers to two decimal places.
      FIRM INDUSTRY
    Profit margin  % 2.17%
    Total assets turnover x 1.47x
    Equity multiplier x x
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