Read Ratios And Financial Planning At East Coast Yachts Case (Closing Case on page 80) and answer the following questions: Calculate all of the ratios listed in the industry table for East Coast Yacht
Assignment 2
All the ratios for East Cost Yachts,
(1)Current Ratio=Current Asset/Current liabilities=51,123,050/50,584,750=1.01
(2)Quick Ratio=Current Assets-Inventory/Current liabilities=51,123,050-20,149,650/50,584,750=0.61
(3)Total Assets Turnover=Sales/Total Assets =611,582,000/401,558,750=1.52
(4)Inventory Turnover=COGS/Inventory=431,006,000/20,149,650=21.3
(5)Receivables Turnover=Sales/Accounts Receivable=611,582,000/18,681,500=32.73
(6)Debt Ratio=Total Assets-Total Equity/Total Assets=401,558,750-181,714,000/401,558,750=0.54
(7)Debt Equity Ratio=Total Debit/Total Equity=169,260,000/181,714,000=0.93
(8)Equity Multiplier=Total Assets/Total Equity=401,558,750/181,714,000=2.21
(9)Interest Coverage=EBIT/Interest=87,531,900/11,000,900=7.96
(10)Profit Margin=Net income/Sales=45,918,600/611,582,000=0.075
(11)ROA=Net income/Total Assets=45,918,600/401,558,750=0.114
(12)ROE=Net income/Total Equity=45,918,600/181,714,000=0.253
Comparison the East Coast Yachts Ratio to Yachts Industry Ratio
| Comparison the East Coast Yachts Ratio to Yachts Industry Ratio | ||||
| Yachts Industry Ratio | ||||
| Financial Ratio | Value | Lower Quartile | Median. | Upper Quartile |
| Current Ratio | 1.01 | 0.86 | 1.51 | 1.97 |
| Quick Ratio | 0.61 | 0.43 | 0.75 | 1.01 |
| Total Asset Turnover | 1.52 | 1.10 | 1.27 | 1.46 |
| Inventory Turnover | 21.3 | 12.18 | 14.38 | 16.43 |
| Receivable Turnover | 32.73 | 10.25 | 17.65 | 22.43 |
| Debt Ratio | 0.54 | 0.32 | 0.56 | 0.61 |
| Debt-Equity-Ratio | 0.93 | 0.83 | 1.13 | 1.44 |
| Equity Multiplier | 2.21 | 1.83 | 2.13 | 2.44 |
| Interest Coverage | 7.96% | 5.72 | 8.21 | 10.83 |
| Profit Margin | 7.5% | 5.02% | 7.48% | 9.05% |
| ROA | 11.4% | 7.05% | 10.67% | 14.16% |
| ROE | 25.3% | 14.06% | 19.32% | 26.41% |
Performance of East Cost Yachts to the industry as a whole:
According to the data analysis in the above table, it is possible to calculate the total asset turnover rate, inventory turnover rate, accounts receivable turnover rate, equity multiplier, profit margin, returns on assets, and return on equity of the East Coast Yacht Company are higher than that of the yacht. Industry average
The company's current ratio and quick ratio are far below the industry average, and the company's short-term repayment ability is also lower than other companies in the same industry. Although this part of the company's data is far below average. However, the company's total asset turnover rate, inventory turnover rate and receiving turnover rate are higher than the industry average of the same industry, which can be analyzed that the company's operational efficiency is higher. From the data in the table, we can know that the company's long-term repayment ability is no problem. Because the company's corporate debt ratio, debt-to-equity ratio, equity multiplier, and interest coverage are almost the same as in the industry. However, the company also has its advantages. The company's profit margin, return on assets, and return on equity are all above the same average. According to the above data, the company is at the leading level in the same industry.
External funds (EFN)
Sustainable Growth rate=Return on Equity*(1-Dividend Payout Ratio)
Return on Equity=Net income/Equity=45,918,600/181,714,000=25%
Sustainable Growth rate=ROE-*(1-DPR)=25%*[1-(17,374,500/45,918,600)]=15.5%
External Fund Needed=Total Assets-Total Liabilities& Equity=
Sustainable Growth Rate of 15.5%
Sales
Cost of Goods Sold
Selling general and administrative
De
