4-23 RATIO ANALYSIS

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

a. Calculate the indicated ratios for Barry.

b. Construct the DuPont equation for both Barry and the industry.

c. Outline Barry's strengths and weaknesses as revealed by your analysis.

d. Suppose Barry had doubled its sales as well as its inventories, accounts receivable, and common equity during 2015. 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 needed.)

4-24 DUPOINT ANALYSIS

a. Calculate the ratios you think would be useful in this analysis.

b. Construct a DuPont equation, and compare the company's ratios to the industry average ratios.

c. Do the balance sheet accounts or the income statement figures seem to be primarily responsible for the low profits?

d. Which specific accounts seem to be most out of line relative to other firms in the industry?

e. If the firm had a pronounced seasonal sales pattern or if it grew rapidly during the year, how might that affect the validity of your ratio analysis? How might you correct for such potential problems?

Attachment:- Questions Data.rar