East Coast Yachts key Essay

1. Calculate all of the ratios listed in the persistence table for East swoop YachtsCurrent ratio=CA/CL= 14,651,000/19,539,000=0.75 speedily Ratio=(CA- register)/CL=(14651000-6136000)/19539000=0.44 add assert dollar volume=Sales / nume point Assets=167310000/108615000=1.54 gunstock derangement=Cost of Goods Sold / Inventory=117910000/6136000=19.22 Receivable turnover=Sales / Accounts Receivable=167310000/5473000=30.57 Debt ratio(TA-TE)/TA=(108615000-55341000)/108615000=0.49Debt-equity ratio=TD/TE=33735000/55341000=0.61Equity multiplier=TA/TE=108615000/55341000=1.96Interest insurance coverage=23496000/300900=7.96 pull in margin= top Income / Sales=12562200/167310000=0.07Return on asserts=Net Income / tote up Assets=12562200/108615000=0.12 Return on equity=Net Income / Total Equity=12562200/55341000=0.232. par the performance of East strand Yachts to the industry as a whole. For to each one ratio, comment on why it might be viewed as unequivocal or negative relative to th e 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 add up? Current ratio is negative because CA smaller than CLQuick Ratio is corroborative because the ratio is bigger than the industry upper quartile ratio. Total assert turnover is corroboratory the ratio because the ratio is bigger than the industry upper quartile ratio. Inventory turnover is positive because it is high than the industry average. It represents that the club has a high sales based on its inventory.Receivable turnover is positive because it shows that the company can collect the sales faster. Debt ratio is positive because it shows that the company has a discredit debt risk than the industry average. Debt-equity ratio is positive because it shows that the company is less aggressive using debt which means the company has comparatively lower debt risk. Equity multiplier is ne gative because it shows that the company has a lower accounting return. Interestcoverage=Profit margin is about the aforementioned(prenominal) with the industry average.Return on assets is positive because the profit per dollar of assets is higher than the industry average. Return on equity is positive because it shows that the company has make better shareholders fare. Inventory Ratio= CL /Inventory =19539000/6136000=3.18Inventory is negative It is still smaller than industry lower quartile It represents that the company has a low sales based on its inventory.3. Calculate the sustainable egression rate of East Coast Yachts. Calculate external funds compulsory (EFN) and prepare pro forma income statements and balance sheets assuming growth at incisively this rate. Recalculate the ratios in the previous question. What do you observe? ROE=ni/te=125622000/55341000=0.23B=re/ni=5024800/12562200=0.4Sustainable Growth rate=ROE*b/1-roe*b=0.23*0.4/1-0.23*0.40=0.099EFN= TA-(TL+E)=1086150 00*1.099-19539000*1.099+3373500+55341000*1.1099=3166002All Current ratio=CA/CL= 14,651,000*1.09/19,539,000*1.09=0.75 QuickRatio=(CA-Inventory)/CL=(14651000*1.09-6136000*1.09)/19539000*1.09=0.44 Total assert turnover=Sales / Total Assets=167310000*1.09/108615000*1.09=1.54 Inventory turnover=Cost of Goods Sold / Inventory=117910000*1.09/6136000*1.09=19.22 Receivable turnover=Sales / Accounts Receivable=167310000*1.09/5473000*1.09=30.57 Debt ratio(TA-TE)/TA=(108615000-55341000*1.09)/108615000*1.09=0.49 Debt-equity ratio=TD/TE=33735000*1.09/55341000*1.09=0.61Equity multiplier=TA/TE=108615000*1.09/55341000*1.09=1.96Interest coverage=23496000*1.09/300900*1.09=8.93Profit margin=Net Income / Sales=12562200*1.09/167310000*1.09=0.07 Return onasserts=Net Income / Total Assets=12562200*1.09/108615000*1.09=0.12 Return on equity=Net Income / Total Equity=12562200*1.09/55341000*1.09=0.23 Only interest coverage changed.4As a practical matter, East Coast Yachts is unlikely to be unbidden to raise e xternal equity capital, in part because the owners dont want to dilute their existing ownership and control positions. However, East Coast Yachts is planning for a growth rate of 20 percent side by side(p) course of instruction. What are your conclusions and recommendations about the feasibility of East Coasts refinement plans?EFN= TA-(TL+E)=108615000*1.2-19539000*1.2+3373500+55341000*1.2=87530405. Most assets can be change magnitude as a percent of sales. For instance, cash can be increased by any amount. However, primed(p) assets often must be increased in specific amounts because it is impossible, as a practical matter, to buy part of a new seed or machine. In this case a company has a stairway or lumpy fixed cost structure. Assume that East Coast Yachts is currently producing at 100 percent Of capacity. As a result, to carry production, the company must set up an entirely new line of reasoning at a cost of $30 million. Calculate the new EFN with this assumption. What doe s this imply about capacity utilization for East Coast Yachts next year?Depreciation percentage= $5,460,000 / $93,964,000= .0581Pro forma depreciation=0.581*123964000=7203221EFN= TA-(TL+E)=108615000*1.2+3000000 -19539000*1.2+3373500+55341000*1.2=23004405 The fixed assets have increased faster than sales, so the capacity utilization for next year leave decrease.