East Coast Yachts
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 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? Answer) 2.
| 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 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? Answer) 2.