Ratio Analysis marketing homework help

Problem 4-23
Ratio Analysis

Data for Barry Computer Co. and its industry averages follow.

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Barry Computer Company:

Balance Sheet as of December 31, 2015 (In Thousands)

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Cash

$77,500

Accounts payable

$129,000

Receivables

336,000

Other current liabilities

117,000

Inventories

241,500

Notes payable

84,000

 Total current assets

$655,000

 Total current liabilities

$330,000

Long-term debt

$256,500

Net fixed assets

292,500

Common equity

361,000

Total assets

$947,500

Total liabilities and equity

$648,000

Barry Computer Company:
Income Statement for Year Ended December 31, 2015(In Thousands)

Sales

$1,607,500

Cost of goods sold

 Materials

$717000

 Labor

453,000

 Heat, light, and power

68,000

 Indirect labor

113,000

 Depreciation

41,500

$1,39,500

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

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

Ratio

Barry

Industry Average

Current

x

2.0x

Quick

x

1.3x

Days sales outstandinga

days

35days

Inventory turnover

x

6.7x

Total assets turnover

x

3.0x

Profit margin

%

1.2%

ROA

%

3.6%

ROE

%

9.0%

ROIC

%

7.5%

TIE

x

3.0x

Debt/Total capital

%

47.0%

Application:
Using Ratio Analysis To Inform Organizational Decisions

The Assignment: Barry Computer Company

Prepare a performance report on Barry Computer Company. (Problem 4-23 on pages 131-132 of the course text provides a balance sheet and an income statement for the company.)

  • Prepare your performance report to show calculations for the eleven ratios listed on page 131-132, as well as a comparison of your computed ratios with the listed industry averages.
  • Write a short memo to your supervisor explaining your findings and your recommendations for improvement.
  • Suggest some ways in which the company can plan to improve below industry average ratio performance.
  • Explain why your recommendations would be effective.  
  • Be sure to list your computations in an appendix to your report.

General Guidance on Application Length:

The memo portion of this assignment will typically be 2 pages in length as a general expectation/estimate. You can show your calculations of financial ratios in a supplemental appendix to your memo. Refer to the rubric for the Week 2 Assignment for grading elements and criteria for the assignment. Your Instructor will use the rubric to assess your work.

AUTHENIC WORK, PLEASE USE OWN WORK

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