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East Yatch Solution

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Submitted By lovelyshine
Words 1482
Pages 6
1-Compute all industry ratios presented for East Coast Yachts and COMPARE and comment on each ratio as compared to the Industry Median. (60pts)

Industry ratios presented for East Coast Yachts

Current ratio = $11,270,000 / $15,030,000
Current ratio = 0.75 times

Quick ratio = ($11,270,000 – 4,720,000) / $15,030,000
Quick ratio = 0.44 times

Total asset turnover = $128,700,000 / $83,550,000
Total asset turnover = 1.54 times

Inventory turnover = $90,700,000 / $4,720,000
Inventory turnover = 19.22 times

Receivables turnover = $128,700,000 / $4,210,000
Receivables turnover = 30.57 times

Total debt ratio = ($83,550,000 – 42,570,000) / $83,550,000
Total debt ratio = 0.49 times

Debt-equity ratio = ($15,030,000 + 25,950,000) / $42,570,000
Debt-equity ratio = 0.96 times

Equity multiplier = $83,550,000 / $42,570,000
Equity multiplier = 1.96 times

Interest coverage = $18,420,000 / $2,315,000
Interest coverage = 7.96 times

Profit margin = $9,663,000 / $128,700,000
Profit margin = 7.51%

Return on assets = $9,663,000 / $83,550,000
Return on assets = 11.57%

Return on equity = $9,663,000 / $42,570,000
Return on equity = 22.70%

Liquidity or Short-Term Solvency Ratios
Calculate and compare to industry ratios: | East Coast Yachts | Lower Quartile | Median | Upper Quartile | Positive, Negative, or Neutral Relative to Industry | Current Ratio | 0.75 | 0.50 | 1.43 | 1.89 | NegativeIt is not positive as it is lower than median. It shows that company has fewer current assets to pay its current liabilities than industrial average. | Quick Ratio | 0.44 | 0.21 | 0.38 | 0.62 | PositiveIt is positive as it little higher than median. It shows that company has little more quick assets than to pay its current liabilities than industrial average. |

Asset Management or Turnover Ratios
Calculate and compare to industry ratios: |

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