Ratios and Financial Planning at East Coast Yachts

Mini Case

Ratios and Financial Planning at East Coast Yachts

Mini Case

Ratios and Financial Planning at East Coast Yachts

Finance 438

Zachary Harp

Finance 438

Zachary Harp

Current Ratio | CA/CL | 0.742 |

Quick Ratio | (CA-Inv)/CL | 0.431 |

Total Asset Turnover | Sales/TA | 1.798 |

Inventory Turnover | Sales/Inv | 31.818 |

Receivables Turnover | Sales/AR | 35.675 |

Debt Ratio | (TA-TE)/TA | 0.492 |

Debt-Equity Ratio | TD/TE | 0.970 |

Equity Multiplier | TA/TE | 1.970 |

Interest Coverage | EBIT/Int. Exp | 7.974 |

Profit Margin | NI/Sales | 7.52% |

Return on Assets | NI/TA | 13.52% |

Return on Equity | NI/TE | 26.64% |

1)

2) Current Ratio- Negative due to the fact that it falls below the Industry median and also because current liabilities are greater than current assets.

Quick Ratio- Positive because it is greater than the industry median, however it still needs to improve because it is lower than the industries upper quartile.

Total Asset Turnover- Positive because it is above the industries upper quartile.

Inventory Turnover- Positive because it is greater than the industries upper quartile. This also means that the company has high sales based on their inventory.

Receivables Turnover- Positive because it is higher than the industry median, which means that they collect their accounts receivable more often than most in the industry.

Debt Ratio- Positive because its below industry median, which means that this company is less leveraged and has less financial risk than most others in the industry.

Debt-Equity Ratio- Positive because it’s lower than the industry median, meaning that this company has been less aggressive when using debt for financing.

Equity Multiplier- Positive because its lower than the industry median and also shows that this company is not relying on debt to finance its assets as much as most other companies.

Interest Coverage- negative because it is lower than the industry median, meaning...