Ratio analysis Ratio Analysis Data for Barry Computer Co. and its industry avera
ID: 2600777 • Letter: R
Question
Ratio analysis Ratio Analysis Data for Barry Computer Co. and its industry averages follow. Barry Computer Company: Balance Sheet as of December 31, 2014 (In Thousands) $210,560 Other current liabilities195,520 150,400 $556,480 Accounts payable Cash Receivables Inventories $195,520 481,280 315,840 $992,640 Notes payable Total current liabilities Long-term debt Common equity Total liabilities and equity Total current assets $315,840 631,680 $1,504,00o Net fixed assets 511,360 Total assets $1,504,000 Barry Computer Company: Income Statement for Year Ended December 31, 2014 (In Thousands) Sales $2,350,000 Cost of goods sold Materials Labor Heat, light, and power $1,081,000 587,500 70,500Explanation / Answer
a. Current Ratio = Current Assets/current liabilities 992640/556480 1.8 Quick Ratio= (Receivables+cash)/Current Liability (481280+195520)/556480 1.22 Days of sales outstanding (Accounts Receivable/Total credit sales)*no. of days (481280/2350000)*365 74.752 days Inventory Turnover COGS/Average inventory 1997500/315840 6.32 Total asset turnover Net sales/Total assets 2350000/1504000 1.5625 Profit margin Net profit/sales 71335/2350000 3.04% Return on assets Net Income/total assets 71335/1504000 4.74% return on equity = Net Income/Shareholders Equity 71335/631680 11.29% ROIC Net operating profit after tax/invested capital (141000-47556) / (315840+631680) 9.86% TIE EBIT/Interest 141000/22109 6.37 Debt/Total capital 315840/(631680+315840) 33.33% b. FIRM Industry Profit margin 3.04% 2.89% Total assets turnover 1.56 1.73 Equity multiplier assets/equity 1504000/631680 2.380952381 ROE FIRM 11.29% Industry Equity multiplier assets/equity 1/0.515 1.941747573 ROE Industry 0.0289*1.73*1.942 9.7% Equity multiplier for industry is calculated as we know debt to capital ratio is 48.50% meaning that debt comprises of 48.5% of total capital. So equity should be 1-0.485 = 0.515, now we know equity, and total of assets is 1. c. answer is last option V. d. answer is last option V.
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