Question

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	$183,600		Accounts payable	$285,600
Receivables	571,200		Other current liabilities	183,600
Inventories	571,200		Notes payable to bank	183,600
Total current assets	$1,326,000		Total current liabilities	$652,800
			Long-term debt	$612,000
Net fixed assets	714,000		Common equity (77,520 shares)	775,200
Total assets	$2,040,000		Total liabilities and equity	$2,040,000

Barry Computer Company: Income Statement for Year Ended December 31, 2018 (In Thousands)
Sales			$3,000,000
Cost of goods sold
Materials	$1,320,000
Labor	870,000
Heat, light, and power	210,000
Indirect labor	120,000
Depreciation	60,000		2,580,000

Gross profit	$	420,000
Selling expenses		210,000
General and administrative expenses	$	60,000
Earnings before interest and taxes (EBIT)	$	150,000
Interest expense		67,320
Earnings before taxes (EBT)	$	82,680
Federal and state income taxes (40%)		33,072
Net income	$	49,608
Earnings per share	$	0.63994
Price per share on December 31, 2018	$	12.00

1. Calculate the indicated ratios for Barry. Round your answers to two decimal places.

   Ratio	Barry	Industry Average
   Current	x	1.98x
   Quick	x	1.19x
   Days sales outstandinga	days	32.47 days
   Inventory turnover	x	5.51x
   Total assets turnover	x	1.66x
   Profit margin	%	1.55%
   ROA	%	2.56%
   ROE	%	6.81%
   ROIC	%	7.30%
   TIE	x	2.20x
   Debt/Total capital	%	49.35%
   M/B	%	5.20%
   P/E	%	21.48%
   EV/EBITDA	%	10.01%

   
   ^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	%	1.55%
   Total assets turnover	x	1.66x
   Equity multiplier	x	x

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

1 e W ? v 1* 01:00 ENG 13-02-207023 fix EC541 DX 541 barry 542 X DY DZ EA EB EC ED EE E F EG EH 2018 2.03 [=1326000/652800] CURRENT RATIO = CURRENT ASSETS/CURRENT LIABILITIES 544 QUICK RATIO = (CURRENT ASSETS - INVENTORY)/CURRENT LIABILITIES 1.16 (=(1326000-571200)/652800] 546 547 DAYS SALES OUSTANDING = 365 DAYS X ACCOUNTS RECEIVABLE/SALES 69.50 (=365*571200/3000000] INVENTORY TURNOVER = SALES/INVENTORY 2.32 [=1326000/571200] TOTAL ASSETS TURNOVER = SALES/TOTAL ASSETS 1.47 (=3000000/2040000] 550 551 552 553 554 PROFIT MARGIN = NET INCOME/SALES 1.65% (=49608/3000000] 555 ROA = NET INCOME/TOTAL ASSETS 2.43% (=49608/2040000] tai ROE = NET INCOME/COMMON EQUITY 6.40% (=49608/775200] 558 559 560 5.73% (=150000*(1-0.4)/(183600 + 612000 + 775200)] ROIC = EBIT(1-t)/INVESTED CAPITAL INVESTED CAPITAL = NOTES PAYABLE + LONG TERM DEBT + COMMON EQUITY 561 TIE = EBIT/INTEREST EXPENSES 2.23 (=150000/67320] 562 563 гся ENTITATAI ANITA ... CASH BUDGET budget 45 days cycle ROE, BV MV ratio VARIANCE BEP, OL FL ratios DETROIT float FACrnI110cnn. 11000 1110cnnn n B-S profit loss SALES BUDGET dupont ... nnnll ►

1 e w ? v 1* 01:00 ENG 13-02-207023 - fix EG583 oX X or oz EA EB EC ED EE E F EG EH 561 TIE = EBIT/INTEREST EXPENSES 2.23 (=150000/67320] 562 563 564 50.65% (=(183600 + 612000)/(183600 + 612000 + 775200)] DEBT/TOTAL CAPITAL (NOTES PAYABLE + LONG TERM DEBT)/(NOTES PAYABLE + LONG TERM DEBT + COMMON EQUITY) 566 1.20 (=177520*12)/775200] MARKET TO BOOK RATIO MARKET VALUE / BOOK VALUE = (NO OF SHARES X PRICE)/EQUITY 568 569 570 P/E PRICE EARNINGS RATIO = MARKET PRICE/EPS = 18.75 (=12/0.63994] 572 7.34 573 EV/EBITDA = ENTERPRISE VALUE / EBITDA [=((77520*12) +612000 + 183600 - 183600)/(150000 + 60000 ENTERPRISE VALUE = MARKET VALUE OF SHARES + LONG TERM DEBT + NOTES PAYABLE - CASH EBITDA = EBIT + DEPRECIATION 574 575 576 577 b FIRM 578 579 580 DUPONT PROFIT MARGIN TOTAL ASSETS TURNOVER EQUITY MULTIPLIER (ROE/ROA) B 1.65% 1.47 2.63 (6.40/2.43] INDUSTRY 1.55% 1.66 2.66 [=6.81/2.56] 581 582 583 584 ROE = AXBXC 6.40% 6.84% ... CASH BUDGET budget 45 days cycle ROE, BV MV ratio VARIANCE BEP, OL FL ratios DETROIT float B-S profit loss SALES BUDGET dupont ... :