Finance Case 1
Ratios and Financial Planning at East Coast Yachts 1.
Current Ratio= Current Assets/Current Liabilities
= 17,582,000/23,689,300
= 0.74
Quick Ratio = (Current Assets – Inventories)/Current Liabilities
=(17,582,0007,363,700)/23,689,300
=0.43
Total Asset Turnover = Sales/Total Assets
=234,,300,000/130,338,900
=1.8
Inventory Turnover = Cost of Goods Sold/Inventory
=165,074,000/7,363,700
=22.41
Receivables Turnover = Sales/Accounts Receivable
=234,300,000/6,567,600
=35.68
Total Debt Ratio = (Total Assets – Total Equity)/Total Assets
=(130,338,90066,169,600)/130,338,900
=0.49
DebtEquity Ratio = Total Debt/Total Equity
=(23,689,300+40,480,000)/66,169,600
=0.97
Equity Multiplier = Total Assets/Total Equity
=130,338,900/66,169,600
=1.97
Interest Coverage= EBIT/Interest
=33,591,000/4,212,600
=7.97
Profit Margin = Net Income/Sales
=17,627,040/234,300,000
=0.07523 = 7.52%
Return on Assets = Net Income/Total Assets
=17,627,040/130,338,900
=0.1352 = 13.52%
Return on Assets = Net Income/Total Assets
=17,627040/66,169,600
=0.2664 = 26.64%
2.
2.1.
Current ratio
2.1.1.
Current ratio is calculated as total current assets divided by total current liabilities. Current ratio is a measure of shortterm liquidity. The current ratio of ECY is below the median industry ratio. So the ECY’s current
2.2.
2.3.
2.4.
2.5.
2.6.
2.7.
2.8.
2.9.
ratio is negative relative to the industry. This situation indicates that
ECY may have more liabilities than assets.
Quick ratio
2.2.1.
Quick ratio is calculated as current assets minus inventories then divided by total current liabilities. From the chart, we can see ECY’s quick ratio is below the median of industry. It means ECY’s inventory is less than the median of industry. Therefore, ECY’s quick ratio is positive relative to the industry ratio.
Total assets turnover
2.3.1.
Total assets turnover is calculated as sales divided by total assets. It indicates for every dollar in assets, how
Current Ratio= Current Assets/Current Liabilities
= 17,582,000/23,689,300
= 0.74
Quick Ratio = (Current Assets – Inventories)/Current Liabilities
=(17,582,0007,363,700)/23,689,300
=0.43
Total Asset Turnover = Sales/Total Assets
=234,,300,000/130,338,900
=1.8
Inventory Turnover = Cost of Goods Sold/Inventory
=165,074,000/7,363,700
=22.41
Receivables Turnover = Sales/Accounts Receivable
=234,300,000/6,567,600
=35.68
Total Debt Ratio = (Total Assets – Total Equity)/Total Assets
=(130,338,90066,169,600)/130,338,900
=0.49
DebtEquity Ratio = Total Debt/Total Equity
=(23,689,300+40,480,000)/66,169,600
=0.97
Equity Multiplier = Total Assets/Total Equity
=130,338,900/66,169,600
=1.97
Interest Coverage= EBIT/Interest
=33,591,000/4,212,600
=7.97
Profit Margin = Net Income/Sales
=17,627,040/234,300,000
=0.07523 = 7.52%
Return on Assets = Net Income/Total Assets
=17,627,040/130,338,900
=0.1352 = 13.52%
Return on Assets = Net Income/Total Assets
=17,627040/66,169,600
=0.2664 = 26.64%
2.
2.1.
Current ratio
2.1.1.
Current ratio is calculated as total current assets divided by total current liabilities. Current ratio is a measure of shortterm liquidity. The current ratio of ECY is below the median industry ratio. So the ECY’s current
2.2.
2.3.
2.4.
2.5.
2.6.
2.7.
2.8.
2.9.
ratio is negative relative to the industry. This situation indicates that
ECY may have more liabilities than assets.
Quick ratio
2.2.1.
Quick ratio is calculated as current assets minus inventories then divided by total current liabilities. From the chart, we can see ECY’s quick ratio is below the median of industry. It means ECY’s inventory is less than the median of industry. Therefore, ECY’s quick ratio is positive relative to the industry ratio.
Total assets turnover
2.3.1.
Total assets turnover is calculated as sales divided by total assets. It indicates for every dollar in assets, how