close solutoin list

RATIO ANALYSIS 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. a. Calculate the indicated ratios for Barry. b. Construct the DuPont equation for both Barry and the industry. c. C Outline Barry’s strengths and weakness as revealed by your analysis. d. Suppose Barry had doubled its sales as Well as its inventories, accounts receivable and common equity during 2018. How would that information affect the validity of your ratio analysis? (Hint: Think about averages and the effects of rapid growth on ratios if averages are not used. No Calculated are needed.) Barry Computer Company: Income Statement for Year Ended December 31, 2018 (in Thousands) Sales $ 1,607,500 Cost of goods sold Materials $ 717,000 Labor 453,000 Heat, light, and power 68,000 Indirect labor 113,000 Depreciation 41,500 1,392,500 Gross profit $ 215,000 Selling expenses 115,000 General and administrative expenses 30,000 Earnings before interest and taxes (EBIT) $ 70,000 Interest expense 24,500 Earnings before taxes (EBT) $ 45,500 Federal and State income taxes (40%) 18,200 Net income $ 27,300 Earnings per share 0.75623 Price per share on December 31, 2018 $ 12.00 Ratio Barry Industry Average Current _____ 2.0× Quick _____ 1.3× Days sales outstanding _____ 35 days Inventory Turnover _____ 6.7× Total assets turnover _____ 3.0× Profit margin _____ 1.2% ROA _____ 3.6% ROE _____ 9.0% ROIC _____ 7.5% TIE _____ 3.0× Debt/Total capital _____ 47.0% M/B _____ 4.22 P/E _____ 17.86 EV/EBITDA _____ 9.14 *Calculation is based on a 365-day year.

BuyFind

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781337395250
BuyFind

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781337395250

Solutions

Chapter
Section
Chapter 4, Problem 23P
Textbook Problem

RATIO ANALYSIS 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.

  1. a. Calculate the indicated ratios for Barry.
  2. b. Construct the DuPont equation for both Barry and the industry.
  3. c. C Outline Barry’s strengths and weakness as revealed by your analysis.
  4. d. Suppose Barry had doubled its sales as Well as its inventories, accounts receivable and common equity during 2018. How would that information affect the validity of your ratio analysis? (Hint: Think about averages and the effects of rapid growth on ratios if averages are not used. No Calculated are needed.)

Chapter 4, Problem 23P, RATIO ANALYSIS Data for Barry Computer Co. and its industry averages follow. The firms debt is

Barry Computer Company: Income Statement for Year Ended December 31, 2018 (in Thousands)

Sales   $ 1,607,500
Cost of goods sold    
Materials $ 717,000  
Labor 453,000  
Heat, light, and power 68,000  
Indirect labor 113,000  
Depreciation 41,500 1,392,500
Gross profit   $ 215,000
Selling expenses   115,000
General and administrative expenses   30,000
Earnings before interest and taxes (EBIT)   $ 70,000
Interest expense   24,500
Earnings before taxes (EBT)   $ 45,500
Federal and State income taxes (40%)   18,200
Net income   $ 27,300
Earnings per share   0.75623
Price per share on December 31, 2018   $ 12.00
Ratio Barry Industry Average
Current _____ 2.0×
Quick _____ 1.3×
Days sales outstanding _____ 35 days
Inventory Turnover _____ 6.7×
Total assets turnover _____ 3.0×
Profit margin _____ 1.2%
ROA _____ 3.6%
ROE _____ 9.0%
ROIC _____ 7.5%
TIE _____ 3.0×
Debt/Total capital _____ 47.0%
M/B _____ 4.22
P/E _____ 17.86
EV/EBITDA _____ 9.14

*Calculation is based on a 365-day year.

Expert Solution

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Solution

*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.

Chapter 4 Solutions

Fundamentals of Financial Management (MindTap Course List)
Show fewer chapter solutions
Ch. 4 - Financial ratio analysis is conducted by three...Ch. 4 - Why would the inventory turnover ratio be more...Ch. 4 - Over the past year, M.D. Ryngaert Co. had an...Ch. 4 - Profit margins and turnover ratios vary from one...Ch. 4 - How does inflation distort ratio analysis...Ch. 4 - If a firms ROE is low and management wants to...Ch. 4 - Give some examples that illustrate how (a)...Ch. 4 - Why is it sometimes misleading to compare a...Ch. 4 - Suppose you were comparing a discount merchandiser...Ch. 4 - Refer to an online finance source such as Yahoo!...Ch. 4 - Differentiate between ROE and ROIC.Ch. 4 - Indicate the effects of the transactions listed in...Ch. 4 - DAYS SALES OUTSTANDING Baxley Brothers has a DSO...Ch. 4 - DEBT TO CAPITAL RATIO Kayes Kitchenware has a...Ch. 4 - DuPONT ANALYSIS Hendersons Hardware has an ROA of...Ch. 4 - MARKET/BOOK AND EV/EBITDA RATIOS Edelman Engines...Ch. 4 - PRICE/EARNINGS RATIO A company has an EPS of 2.40,...Ch. 4 - DuPONT AND ROE A firm has a profit margin of 3%...Ch. 4 - ROE AND ROIC Baker Industriess net income is...Ch. 4 - DuPONT AND NET INCOME Precious Metal Mining has 17...Ch. 4 - BEP, ROE, AND ROIC Broward Manufacturing recently...Ch. 4 - M/B,SHARE PRICE, AND EV/EBITDA You are given the...Ch. 4 - RATIO CALCULATIONS Assume the following...Ch. 4 - RATIO CALCULATIONS Thomson Trucking has 16 billion...Ch. 4 - TIE AND ROIC RATIOS The W.C. Pruett Corp. has...Ch. 4 - RETURN ON EQUITY Pacific Packagings ROE last year...Ch. 4 - RETURN ON EQUITY AND QUICK RATIO Lloyd Inc. has...Ch. 4 - RETURN ON EQUITY Commonwealth Construction (CC)...Ch. 4 - CONCEPTUAL: RETURN ON EQUITY Which of the...Ch. 4 - TIE RATIO MPI Incorporated has 6 billion in...Ch. 4 - CURRENT RATIO The Stewart Company has 2,392,500 in...Ch. 4 - DSO AND ACCOUNTS RECEIVABLE Ingraham Inc....Ch. 4 - P/E AND STOCK PRICE Ferrell Inc. recently reported...Ch. 4 - BALANCE SHEET ANALYSIS Complete the balance sheet...Ch. 4 - RATIO ANALYSIS Data for Barry Computer Co. and its...Ch. 4 - Income Statement for Year Ended December 31, 2018...Ch. 4 - RATIO ANALYSIS The Corrigan Corporation's 2017 and...Ch. 4 - FINANCIAL STATEMENTS AND TAXES Part I of this...Ch. 4 - Conducting a Financial Ratio Analysis on HP INC....Ch. 4 - Conducting a Financial Ratio Analysis on HP INC....Ch. 4 - Conducting a Financial Ratio Analysis on HP INC....Ch. 4 - Conducting a Financial Ratio Analysis on HP INC....Ch. 4 - Conducting a Financial Ratio Analysis on HP INC....Ch. 4 - Conducting a Financial Ratio Analysis on HP INC....Ch. 4 - Conducting a Financial Ratio Analysis on HP INC....Ch. 4 - Conducting a Financial Ratio Analysis on HP INC....

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions
Why is productivity important?

Principles of Economics (MindTap Course List)

MIRR Refer to Problem 11-1. What is the projects MIRR?

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)