East Coast Yachts
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 ratio of 1.12 compared to the industry ratio of 1.51 could be viewed as a potential risk due to an inability to pay current liabilities. A quick ratio of 0.66 for ECY compared to 0.75 could also be viewed as potential weakness. An inventory ratio of 0.46 may show investors that ECY relies heavily on future sales to pay current assets. Lastly, the return on equity for ECY was 22% compared to 14.32% for the industry. This interpretation could pose yet another threat as investors may assume that East Coast Yachts borrow too much money.
From another perspective, the positive impact of the remaining ratios place East coast Yachts in a good position to move forward with its
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 ratio of 1.12 compared to the industry ratio of 1.51 could be viewed as a potential risk due to an inability to pay current liabilities. A quick ratio of 0.66 for ECY compared to 0.75 could also be viewed as potential weakness. An inventory ratio of 0.46 may show investors that ECY relies heavily on future sales to pay current assets. Lastly, the return on equity for ECY was 22% compared to 14.32% for the industry. This interpretation could pose yet another threat as investors may assume that East Coast Yachts borrow too much money.
From another perspective, the positive impact of the remaining ratios place East coast Yachts in a good position to move forward with its