Name : Faiq Ubaidillah

Class : IMaBs A
NIM : 20200410112

a.
Ratio Barry Industry Average
1 ) Current 1,98x 2.0x
2 ) Quick 1,25x 1.3x
3) Days sales outstanding 79.29 days 35 days
4) Inventory turnover 6.66x 6.7x
5) Total assets turnover 1.7x 3x
6) Profit margin 1.7x 1.2%
7) ROA 2.88% 3.6%
8) ROE 7.56% 9%
9) ROIC 10% 7.5%
10) TIE 2.86% 3%
11) Debt/total capital 48.53% 47%

1. Current ration = Current assets

Current liabilities

= $655,000
$330,000

= 1.98x
2. Quick ratio = Quick assets
Current liabilities

Cash + Receivables
=
Current liabilities

= $77,500 + $336,000
$330,000

= $413,500
$330,000

= 1.25x

3. Days sales outstanding = Accounts receivable

Average sales per day

= Accounts receivable
Annual sales
365
 = $336,000
$4,404.1096

= 76.29 days

Sales
4. Inventory turnover = Inventory
= $1,607,500
$241,500

= 6.66x

5. Total assets = Sales

Total Assets
$1,607,500
= $947,500
=1.7x

6. Profit margin = Net income

Sales
$27,300
=
$1,607,500

= 1.7%

7. ROA = Net income

Total assets
$27,300
=
$947,500

=2,88%

8. ROE= Net income

Common equity
$27,300
=
$361,000

= 7.56%
EBIT
9. ROIC =
Interest-Bearing Debt + Equity
EBIT
= Notes payable to bank + long-term debt + common equity
 $70,000
$84,000+$256,500+$361,000
$70,000
= $701,500

= 10%
10. TIE = EBIT
Interest expense
$70,000
=
$24,500
= 2,86x
Total Debt
11. Debt/Capital ratio = Total Capital

= Total Debt
Total Debt + Equity
= Interest-bearing debt
Interest-bearing debt + equity

= Interest-bearing debt
Notes payable to bank + long-term debt + common equity

= $84,000 + $256,500
$84,000 + $256,500 + $361,000

= $340,000
$701,000

= 48,53%

b. Barry:
ROE = Profit margin x total assets turnover x equity multiplier
= Net Income X Sales X Total assets
Sales Total assets Common equity

= $27,300 X $1,607,500 X $947,500

$1,607,500 $947,500 $361,000

= 1,698 % x 1.697 x 2.625

=7.563%
Industry average:
ROE = profit margin x total assets turnover x equity multiplier
= 1,2% x 3 x 2.5
= 9%

c. Outline Barry’s strengths and weaknesses

1. Current ratio: on par with industry
2. Quick ratio: a bit behind with the industry, but nothing significant
3. Days sales outstanding: more than twice longer than the industry average. This is an obvious
weakness in the collection of Barry.
4. Inventory turnover: on par with industry
5. Total assets turnover: almost half of industry. Another weakness on Barry’s part.
6. Profit margin: about 50% higher than the industry. Definitely a strength.
7. Return on assets: almost a whole percent higher behind industry. Weakness
8. Return on equity: more than 1% behind industry. Weakness
9. Return on invested capital: greater than 1/3 of the industry. Strength.
10. Times-interest-earned: a bit behind the industry, but nothing significant.
11. Debt/Capital ratio: in par with industry.

d. While the absolute amounts of the sales and other items have doubled, this will not affect the
ratios computed above. This is so because the increases cancel each other out, resulting to the same,
if not exactly the same ratios.
This is on the assumption that profit margin remains constant. Any such changes will not affect ROE,
ROA and other ratios. If it did, it will only be for an insignificant amount.