East Coast Yacht Solution

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• East Coast Yachts Case Essay

  ...West Coast Yachts of chapter 3 on Page 85. 1.) Calculate all the ratios listed in the industry table for West Coast Yachts. Current ratio = Current assets / current liabilities = $11,270,000 / $15,030,000 = 0.75 times Quick ratio = Current assets – inventory / current liabilities = ($11,270,000 – 4,720,000) / $15,030,000 = 0.44 times Total asset turnover = Sales ; Operating revenue / total assets = $128,700,000 / $83,550,000 = = 1.54 times Inventory turnover = Operating expenses / inventory = $90,070,000 / $4,720,000 = 19.22 times Receivables turnover = Operating revenue / Trade receivables = $128,700,000 / $4,210,000 = 30.57 times Total debt ratio = Total assets – equity / total assets = ($83,550,000 – 42,570,000) / $83,550,000 = 0.49 times Debt-equity ratio = Total debt / Total equity = ($15,030,000 + 25,950,000) / $42,570,000 = 0.96 times Equity multiplier = total assets / total equity = $83,550,000 / $42,570,000 = 1.96 times Interest coverage = EBIT / interest= $18,420,000 / $2,315,000 = 7.96 times Profit margin = Profit attributable to dividend holders / Operating revenue = $11,595,600 / $128,700,000 = 9,01% Return on assets = Profit attributable to dividend holders / Total assets = $11,595,600 / $83,550,000 = 13,88 Return on equity = Profit attributable to dividend holders / Total equity = $11595600 / $42,570,000 =...

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• East Coast Yachts Essay

  ...Company Overview East Coast Yachts was founded in 1969 by Tom Warren as a sole proprietorship which later became a publicly traded corporation after operations were assumed by his daughter (Ross, 2011). Located in South Carolina, the company manufactured custom midsize, high-performance yachts and has been praised for safety and reliability (Ross, 2011). The company enjoyed new business and growth within its industry due to its customer satisfaction. However, an evaluation of cash flows later revealed two key issues: poor planning and limited facilities made it difficult to finance a growth plan and handle customer demands (Ross, 2011). The issues were determined after the financial analyst studied the consolidated income statements and balance sheets for the last two years, along with other short-term management decisions. In an effort overcome the obstacles and make preparations for to fund an expansion, East Coast Yachts completed an industry comparison along with pro forma income statements and balance sheets. East Coast Yachts Ratios and Financial Statements When compared to its industry, East Coast Yachts ratios faired very well. There were twelve ratios compared and only four ratios impacted the company negatively. Those four ratios included the following: A current...

  1374  Words | 4  Pages

• East Coast Yachts Essay

  ...Ratios and Financial Planning at East Coast Yachts | Yacht Industry Ratios | | | Lower Quartile | Median | Upper Quartile | Current ratio | 0.50 | 1.43 | 1.89 | Quick ratio | 0.21 | 0.38 | 0.62 | Total asset turnover | 0.68 | 0.85 | 1.38 | Inventory turnover | 4.89 | 6.15 | 10.89 | Receivables turnover | 6.27 | 9.82 | 14.11 | Debt ratio | 0.44 | 0.52 | 0.61 | Debt-equity ratio | 0.79 | 1.08 | 1.56 | Equity multiplier | 1.79 | 2.08 | 2.56 | Interest coverage | 5.18 | 8.06 | 9.83 | Profit margin | 4.05% | 6.98% | 9.87% | Return on assets | 6.05% | 10.53% | 13.21% | Return on equity | 9.93% | 16.54% | 36.15% | | | | | 1. Calculate all of the ratios listed in the industry table for East Coast yachts. 1. The calculations for the ratios listed are: Current ratio = $14,651,000 / $19,539,000 = 0.75 times Quick ratio = ($14,651,000 – 6,136,000) / $19,539,000 = 0.44 times Total asset turnover = $167,310,000 / $108,615,000 = 1.54 times Inventory turnover = $117,910,000 / $6,136,000 =19.22 times Receivables turnover = $167,310,000 / $5,473,000 = 30.57 times Total debt ratio = ($108,615,000 – 55,341,000) / $108,615,000 = 0.49 times Debt-equity ratio = ($19,539,000 + 33,735,000) / $55,341,000 = 0.96 times Equity multiplier = $108,615,000 / $55,341,000 = 1.96 times...

  2212  Words | 9  Pages

• East Coast Yatchs Solution Essay

  ...EAST COAST YACHTS 1. The calculations for the ratios listed are: 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 = $90,070,000 / $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% 2. Regarding the liquidity ratios, East Coast Yachts current ratio is below the median industry ratio. This implies the company has less liquidity than the industry in general. However, the current ratio is above the lower quartile, so...

  706  Words | 4  Pages

• Financial Ratios for East Coast Yachts Essay

  ...Question 1: Financial ratios for East Coast Yachts: Current ratio | = | Current Assets | | | Debt-equity ratio | = | Total liabilities | | | Current Liabilities | | | | | Total equity | | = | $14,651,000 | | | | = | $19,539,000 + $33,735,000 | | | $19,539,000 | | | | | $55,341,000 | | = | 0.75 | | | | = | 0.96 | | | | | | | | | | | | | | | | | Quick ratio | = | Current Assets - Inventory | | | Equity multiplier | = | Total assets | | | Current Liabilities | | | | | Total equity | | = | $14,651,000 - $6,136,000 | | | | = | $108,615,000 | | | $19,539,000 | | | | | $55,341,000 | | = | 0.44 | | | | = | 1.96 | | | | | | | | | | | | | | | | | Total asset turnover | = | Sales | | | Interest coverage | = | EBIT | | | Total Assets | | | | | Interest | | = | $167,310,000 | | | | = | $23,946,000 | | | $108,615,000 | | | | | $3,009,000 | | = | 1.54 | | | | = | 7.96 | | | | | | | | | | | | | | | | | Inventory turnover | = | COGS | | | Profit margin | = | Net Income | | | Inventory | | | | | Sales | | = | $117,910,000 | | | | = | $12,562,200 | | | $6,136,000 | | | | | $167,310,000 | | = | 19.22 | | | | = | 7.51% | | | | | | | | | | | | | | | | | Receivables turnover | = | Sales | | | Return on assets | = | Net Income |...

  1891  Words | 12  Pages

• Essay on East Coast Yachts

  ...East Coast Yachts Statement of Cash Flows Cash flows from operating activities | | Net income | $38,652,000.00 | Adjustments: | | Depreciation | $16,800,000.00 | Increase in accounts receivables | $-910,000.00 | Increase in inventories | $-4,494,000.00 | Increase in other current assets | $-646,000.00 | Increase in accounts payable | $128,800.00 | Decrease in accrued expenses | $-1,400,000.00 | Decrease in notes payable | $-3,600,000.00 | Cash flows provided by operating activities | $44,530,800.00 | | | How would you describe East Coast Yachts cash flows? When looking at a statement of cash flow it’s essential to find out what resources are being used under the operations category. As our text states, operating cash flow is really the cash flow generated by business activities, including sales of goods and services. Under this category organizations can also calculate tax payments, but not financing, capital spending, or changes in net working capital (Ross, Westerfield, Jaffe, & Jordan, 2009). When examining the East Coast Yachts cash flow statement we can see operating costs are just high enough to finance the company's purchase of fixed assets. Understanding what information is under each category is a key concept to understanding how the cash flow statement is set up.  Which cash flows statement more...

  379  Words | 2  Pages

• Essay about East Coast Yachts key

  ...1. Calculate all of the ratios listed in the industry table for East Coast Yachts Current ratio=CA/CL= 14,651,000/19,539,000=0.75 Quick Ratio=(CA-Inventory)/CL=(14651000-6136000)/19539000=0.44 Total assert turnover=Sales / Total Assets=167310000/108615000=1.54 Inventory turnover=Cost of Goods Sold / Inventory=117910000/6136000=19.22 Receivable turnover=Sales / Accounts Receivable=167310000/5473000=30.57 Debt ratio(TA-TE)/TA=(108615000-55341000)/108615000=0.49 Debt-equity ratio=TD/TE=33735000/55341000=0.61 Equity multiplier=TA/TE=108615000/55341000=1.96 Interest coverage=23496000/300900=7.96 Profit margin=Net Income / Sales=12562200/167310000=0.07 Return on asserts=Net Income / Total Assets=12562200/108615000=0.12 Return on equity=Net Income / Total Equity=12562200/55341000=0.23 2. Compare the performance of East Coast Yachts to the industry as a whole. For each ratio, comment on why it might be viewed as positive or negative relative to the industry. Suppose you create an inventory ratio calculated as inventory divided by current liabilities. How do you interpret this ratio? How does East Coast Yachts compare to the industry average? Current ratio is negative because CA smaller than CL Quick Ratio is positive because the ratio is bigger than the industry upper quartile ratio. Total assert turnover is positive the ratio because...

  681  Words | 3  Pages

• Ratios and Financial Planning at East Coast Yachts Essay

  ...East Coast Yachts Ratios Formula Income Statement Figures FY 2009 Nominator Denominator Ratio Current Ratio Current Assests / Current Liabilities $ 14,651,000.00 $ 19,539,000.00 0.750 Quick Ratio Cash+Mrkt Securities+Net AR / Current Liabilities $ 8,515,000.00 $ 19,539,000.00 0.436 Total Asset Turnover Net Sales Revenue / Average Total Assets $ 167,310,000.00 $ 108,615,000.00 1.540 Inventory Turnover Cost of Goods Sold / Average Inventory $ 117,910,000.00 $ 6,136,000.00 19.216 Receivables Turnover Net Sales / Average Accounts Receivable $ 167,310,000.00 $ 5,473,000.00 30.570 Debt Ratio Total Liabilities / Total Assets $ 53,274,000.00 $ 108,615,000.00 0.490 Debt - equity Ratio Total Liabilities / Total Stockholders' Equity $ 53,274,000.00 $ 55,341,000.00 0.963 Equity Multiplier Total Assests / Total Stockholders' Equity $ 108,615,000.00 $ 55,341,000.00 1.963 Interest Coverage Net Income+Int. Exp.+Income tax exp. / Interest Expense $ 23,945,000.00 $ 3,009,000.00 7.958 Profit Margin Net Income / Net Sales $ 12,562,200.00 $ 167,310,000.00 7.508% Return on Assets Net Income / Average Total Assets $ 12,562,200.00 $ 108,615,000.00 11.566% Return on Equity Net Income / Average Stockholders' Equity $ 12,562,200.00 $ 55,341,000.00 22.700% ECY Yacht...

  1097  Words | 7  Pages