Financial Ratio & Financial Statement

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QUESTION 1

i. Current Ratio
= Current Assets/Current Liability
= $ 14,651,000/$ 19,639,000
= 0.750

ii. Quick Ratio
= (Current Assets – Inventory) / Current Liability
= ($ 14,651,000 – $ 6,136,000) / $ 19,539,000
= 0.436

iii. Total Assets Turnover
= Sales/Total Assets
= $ 167,310,000/$ 108,615,000
= 1.540

iv. Inventory Turnover
= COGS/Inventory
= $ 117,910,000/$ 6,136,000
= 19.216

v. Receivable Turnover
= Sales/Account Receivables
= $ 167,310,000/$ 5,473,000
= 30.570

vi. Debt Ratio
= (Total Assets – Total Equity)/Total Assets
= ($ 108,615,000 – $ 55,341,000)
= 0.490

vii. Debt-Equity Ratio
= Total Debt/Total Equity
= ($ 108,615,000 – $ 55,341,000)/ $ 55,341,000
= 0.963

viii. Interest Coverage
= EBIT/Interest Expenses
= $ 23,946,000/$ 3,009,000
= 7.958

ix. Equity Multiplier
= Total Assets/Shareholders’ Equity
= $ 108,615,000/$ 55,341,000
= 1.963

x. Profit Margin
= Net Income/Sales
= $ 12,562,200/$ 167,310,000
= 7.508%

xi. Return on Assets (ROA)
= Net Income/Total Assets
= $ 12,562,200/$ 108,615,000
= 11.566%

xii. Return on Equity
= Net Income/Total Equity
= $ 12,562,200/$ 6,136,000
= 22.700%

QUESTION 2

Ratios| East Coast Yacht ratios| Yacht Industry Ratios|
| | Lower Quartile| Median| Upper Quartile|
Current Ratio| 0.750| 0.5| 1.43| 1.89|
Quick Ratio| 0.436| 0.21| 0.38| 0.62|
Total asset Turnover| 1.540| 0.68| 0.85| 1.38|
Inventory Turnover| 19.216| 4.89| 6.15| 10.89|
Receivables Turnover| 30.570| 6.27| 9.82| 14.11|
Total debt ratio| 0.490| 0.44| 0.52| 0.61|
Debt/Equity Ratio| 0.963| 0.79| 1.08| 1.56|
Equity Multiplier| 1.963| 1.79| 2.08| 2.56|
Interest Coverage| 7.958| 5.18| 8.06| 9.83|
Profit Margin| 7.508%| 4.05%| 6.98%| 9.87%|
Return of Asset(ROA)| 11.566%| 6.05%| 10.53%| 13.21%|
Return of Equity(ROE)| 22.700%| 9.93%| 16.54%| 26.15%|

ECY's Performance comments relative to the industry|
|
Current Ratio| ECY* will be viewed as negative because generally ECY scored less than 1 & less than the industry median ratio which can be concluded that ECY has a negative net working capital (current assets less than current liabilities).| Quick Ratio| ECY will be viewed as positive in this ratio relative to the industry because ECY are in between median and upper quartile which tells ECY has a good liquidity in the industry.| Total asset Turnover| ECY will certainly be viewed as positive because it stands higher than upper quartile relative to the industry.| Inventory Turnover|  ECY is viewed as negative as its Inventory Turnover is much higher than the industry ratio. The high turnover rate indicates inadequate inventory levels, which may lead to a loss in business as the inventory is too low. This often can result in stock shortage.| Receivables Turnover|  The Receivable Turnover is obviously positive as the ratio is way higher than the industry ratios. The high ratio implies either that the company operates on a cash basis or that its extension of credit and collection of accounts receivable is efficient.| Total debt ratio|  ECY is considered positive as its turnover rate is less than 0.5 compare to the Median and Upper quartile which means the company’s assets are financed through equity. The lower the ratio, the lesser risk will be associated with the firm’s operation.| Debt/Equity Ratio|  Positive. ECY have a low ratio compared to the Median and Upper quartile. A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. So, the low ratio of ECY means that ECY is not burdened with debt.| Equity Multiplier|  ECY is viewed as positive as it has lower ratio as compared to Median and Upper quartile. Means that ECY do not rely on debt to finance its assets.| Interest Coverage|  ECY is still considered as positive even though it is...
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