# East Coast Yacht Solution

**Topics:**Financial ratios, Financial ratio, Balance sheet

**Pages:**5 (1482 words)

**Published:**June 12, 2012

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:

| East Coast Yachts | Lower Quartile| Median| Upper Quartile| Positive, Negative, or Neutral Relative to Industry | Assets Turnover | 1.54| 0.68| 0.85| 1.38| PositiveIt is positive. It shows that company uses assets more effectively than industrial average.| Inventory Turnover | 19.22| 4.89| 6.15| 10.89| PositiveIt is positive. It shows that company uses inventory more effectively than industrial average.| Receivables Turnover | 30.57| 6.27| 9.82| 14.11| PositiveIt is positive. It shows that company uses account receivable more effectively than industrial average.|

Long-Term Solvency Ratios

Calculate and compare to industry ratios:

| East Coast Yachts | Lower Quartile| Median| Upper Quartile| Positive, Negative, or Neutral Relative to Industry | Debt Ratio | 0.49| 0.44| 0.52| 0.61| PositiveIt is positive. It shows that company reliance on debt to finance total assets is less than industrial average.| Debt-Equity Ratio | .99| 0.79| 1.08| 1.56| PositiveIt is positive. It shows that company reliance on debt in total financing is less than Industrial average| Equity Multiplier | 1.96| 1.79| 2.08| 2.56| NUETRALIt is neutral as it’s is slightly less than median. It means that the total assets are increasing the equity less than industrial average.| Interest Coverage | 7.96| 5.18| 8.06| 9.83| NeutralIt seems positive. It means that company earns more profit to pay interest as compared to industrial average.| Profitability Measures

Calculate and compare to industry ratios:

| East Coast Yachts | Lower Quartile| Median| Upper Quartile| Positive, Negative, or Neutral Relative to Industry | Profit Margin | 7.51| 4.05%| 6.98%| 9.87%| PositivePositive investment quality| Return on Assets | 11.57| 6.05%| 10.53%| 13.21%| PositiveThe management of available resources is at least adequate, although there may still be room for improvement in how those resources are used| Return on Equity | 22.70| 9.93%| 16.54%| 26.15%| PositiveReturn on equity is more than what the market is earning,...

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