# East Coast Yachts

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• Published : May 30, 2011

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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%|
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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
Interest coverage = \$23,946,000 / \$3,009,000 = 7.96 times
Profit margin = \$12,562,200 / \$167,310,000 = 7.51%
Return on assets = \$12,562,200 / \$108,615,000 = 11.57%
Return on equity = \$12,562,000 / \$55,341,000 = 22.70%

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?