East Coast Yacht Solution
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,...
Please join StudyMode to read the full document