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the number of shares is shown in thousands too. Barry Computer Company: a. Calculate the indicated ratios for Barry. Do not round intermediate calculations, Round your answers to two decimal places. "Calcufation-is based on a 365-day year. b. Construct the Dupont equation for both Barry and the industry. Do not round intermediate calculatishs. Round your answers to two decimal places. c. Select the correct option based on Barry's strengths and weaknesses as revealed by your analysis. 1. The firm's days sales outstanding ratio is more than the industry average, indicating that the firm should tighten credit or enforce a more stringent collection policy. The total assets turnover ratio is well above the industry average so sales should be increased, assets increased, or both. While the company's profit. margin is higher than the industry average, its other profitability ratios are low compared to the industry - net income should be higher given the amount of equity, assets, and invested capital, However, the company seems to be in an above average lleuldity position and financlal leverage is similar to others in the industry. 11. The firm's days sales outstanding ratio is comparable to the industry average, indicating that the firm should neither tighten credit nor enforce a more stringent collection policy, The tatal assets turnover ratio is weil below the industry average so sales should be increased, assets increased, or both. Whilie the company's profit margin is higher than the industry average, its other profitability ratios are low compared to the industry - net income should be higher given the ameunt of industry. industry. III. The firm's days sales outstanding ratio is more than twice as long as the industry average, indicating that the firm should tighten credit or enforce a more stringent collection policy. The total assets turnover ratio is well below the industry average so sales should be increased, assets decreased, or both. While the company's proft margin is higher than the industry average, its other profitability ratios are low compared to the industry - net income should be higher given the amount of equity, assets, and invested capital. Finally, it's market value ratios are also below industry averages. However, the company seems to be in an tiverage liquidity postion and financial leverage is similar to others in the industry. TV. The firm's days saies outstanding ratio is more than twice as long as the industry average, indicating that the firm should loosen credit or apoly a less stringent collection policy. The total assets tumover ratio is well below the industry dverage so sales should be increased, assets increased or both. While the company's protit margin is higher than the industry average, its other proftability ratios are low compared to the industry- het income should be higher given the amount of equity, assets, and invested capial. However, the company seems to be in an average liquidity position and financial leverage is similar to others in the industry. V. The firm's days sales cutstanding ratio is less than the industry average, indicating that the firm should tighten credit or enforce a more stringent colection. polcy. The total assets turnover ratio is well below the industry average so sales should be increased, assets decreased, or both. While the company's profit. margin is lower than the industry average, its other profitability ratios are high compared to the industry - net income should be nigher given the amount of equity, assets, and invested capital. However, the company seems to be in an everege liquidity position and financial leverage is similar to others in the industry. d. Suppose Barry had doubled its sales as well as its inventories, accounts recelvable, and common equity during 2021 . 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 calculations are neededi) 1. If 2021 represents a period of supernormal growth for the firm, ratios based on this year will be distorted and a comparison between them and industry averages will have little meaning. Potential investors who look only at 20211 ratios will be misled, and a return to normal conditions in 2022 could hurt the firm's stock price: II. If 2021 represents a period of supernormal growth for the firm, ratios based on this year will be accurate and a comparison between them and industry averages will have substantial meaning. Potential lrvestors need only look at 2021 ratios to be well informed, and a return to normal conditions in 2022 could heip the firm's stock price. III. If 2021 represents a period of normal growth for the firm, ratios based on this year will be distorted and a comparison between them and industry averages will have little meaning. Potential investors who look oniy at 2021 ratios will be misled, and a continuation of normal conditions in 2022 could hurt the firm's stock price. IV. If 2021 represents a period of normal growth for the firm, ratios based on this year will be accurate and a comparison between them and industry averages will have substantial meaning. Potential investors who look only at 2021 ratios will be misied, and a return to supernormal conditions in 2022 could hurt the firm's stock price. V. If 2021 represents a period of supernormal growth for the firm, ratios based on this year will be distorted and a comparison between them and industry averages will have substantial mearing. Fotential invertors who leok enly at 2021 ration will be well informed, and a return to narmal conditions in 2022 could hurt the firm's stock price. the number of shares is shown in thousands too. Barry Computer Company: a. Calculate the indicated ratios for Barry. Do not round intermediate calculations, Round your answers to two decimal places. "Calcufation-is based on a 365-day year. b. Construct the Dupont equation for both Barry and the industry. Do not round intermediate calculatishs. Round your answers to two decimal places. c. Select the correct option based on Barry's strengths and weaknesses as revealed by your analysis. 1. The firm's days sales outstanding ratio is more than the industry average, indicating that the firm should tighten credit or enforce a more stringent collection policy. The total assets turnover ratio is well above the industry average so sales should be increased, assets increased, or both. While the company's profit. margin is higher than the industry average, its other profitability ratios are low compared to the industry - net income should be higher given the amount of equity, assets, and invested capital, However, the company seems to be in an above average lleuldity position and financlal leverage is similar to others in the industry. 11. The firm's days sales outstanding ratio is comparable to the industry average, indicating that the firm should neither tighten credit nor enforce a more stringent collection policy, The tatal assets turnover ratio is weil below the industry average so sales should be increased, assets increased, or both. Whilie the company's profit margin is higher than the industry average, its other profitability ratios are low compared to the industry - net income should be higher given the ameunt of industry. industry. III. The firm's days sales outstanding ratio is more than twice as long as the industry average, indicating that the firm should tighten credit or enforce a more stringent collection policy. The total assets turnover ratio is well below the industry average so sales should be increased, assets decreased, or both. While the company's proft margin is higher than the industry average, its other profitability ratios are low compared to the industry - net income should be higher given the amount of equity, assets, and invested capital. Finally, it's market value ratios are also below industry averages. However, the company seems to be in an tiverage liquidity postion and financial leverage is similar to others in the industry. TV. The firm's days saies outstanding ratio is more than twice as long as the industry average, indicating that the firm should loosen credit or apoly a less stringent collection policy. The total assets tumover ratio is well below the industry dverage so sales should be increased, assets increased or both. While the company's protit margin is higher than the industry average, its other proftability ratios are low compared to the industry- het income should be higher given the amount of equity, assets, and invested capial. However, the company seems to be in an average liquidity position and financial leverage is similar to others in the industry. V. The firm's days sales cutstanding ratio is less than the industry average, indicating that the firm should tighten credit or enforce a more stringent colection. polcy. The total assets turnover ratio is well below the industry average so sales should be increased, assets decreased, or both. While the company's profit. margin is lower than the industry average, its other profitability ratios are high compared to the industry - net income should be nigher given the amount of equity, assets, and invested capital. However, the company seems to be in an everege liquidity position and financial leverage is similar to others in the industry. d. Suppose Barry had doubled its sales as well as its inventories, accounts recelvable, and common equity during 2021 . 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 calculations are neededi) 1. If 2021 represents a period of supernormal growth for the firm, ratios based on this year will be distorted and a comparison between them and industry averages will have little meaning. Potential investors who look only at 20211 ratios will be misled, and a return to normal conditions in 2022 could hurt the firm's stock price: II. If 2021 represents a period of supernormal growth for the firm, ratios based on this year will be accurate and a comparison between them and industry averages will have substantial meaning. Potential lrvestors need only look at 2021 ratios to be well informed, and a return to normal conditions in 2022 could heip the firm's stock price. III. If 2021 represents a period of normal growth for the firm, ratios based on this year will be distorted and a comparison between them and industry averages will have little meaning. Potential investors who look oniy at 2021 ratios will be misled, and a continuation of normal conditions in 2022 could hurt the firm's stock price. IV. If 2021 represents a period of normal growth for the firm, ratios based on this year will be accurate and a comparison between them and industry averages will have substantial meaning. Potential investors who look only at 2021 ratios will be misied, and a return to supernormal conditions in 2022 could hurt the firm's stock price. V. If 2021 represents a period of supernormal growth for the firm, ratios based on this year will be distorted and a comparison between them and industry averages will have substantial mearing. Fotential invertors who leok enly at 2021 ration will be well informed, and a return to narmal conditions in 2022 could hurt the firm's stock price

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