East Coast Yachts key Essay

1. Calculate all of the symmetrys listed in the intentness table for eastern United States Coast YachtsCurrent proportionality=CA/CL= 14,651,000/19,539,000=0.75Quick Ratio=(CA- line)/CL=(1465 ampere-second0-6136000)/19539000=0.44 sum total assert turnover=Sales / Total Assets=167310000/108615000=1.54 Inventory turnover=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- paleness ratio=TD/TE=33735000/55341000=0.61Equity multiplier=TA/TE=108615000/55341000=1.96Interest reporting=23496000/300900=7.96Profit brink= give the axe Income / Sales=12562200/167310000=0.07 lessen on asserts= crystalize Income / Total Assets=12562200/108615000=0.12 Return on equity=Net Income / Total Equity=12562200/55341000=0.232. Compare the performance of East Coast Yachts to the industry as a whole. For from each one ratio, comment on why it might be viewed as arbit rary or proscribe carnal knowledge to the industry. Suppose you create an inventory ratio calculated as inventory divided by contemporary liabilities. How do you interpret this ratio? How does East Coast Yachts compare to the industry average? Current ratio is negative because CA smaller than CLQuick Ratio is affirmative because the ratio is bigger than the industry stop number quartile ratio. Total assert turnover is positive the ratio because the ratio is bigger than the industry upper quartile ratio. Inventory turnover is positive because it is higher than the industry average. It represents that the company has a high sales ground 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 lower debt risk than the industry average. Debt-equity ratio is positive because it shows that the company is less rough using debt which means the company has relatively lower debt risk. Equity multiplier is negative because it shows that the company has a lower accounting return. Interestcoverage=Profit margin is around the same 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 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 growth rate of East Coast Yachts. Calculate external funds requisite (EFN) and prepare pro forma income statements and balance sheets assuming growth at precisely this rate. Recalculate the ratios in the preliminary question. What do you observe? ROE=ni/te=125622000/55341000=0.23B=re/ni=5024800/12562200=0.4Sustainable emersion rate=ROE*b/1-roe*b=0.23*0.4/1-0.23*0.40=0.099EFN= TA-( TL+E)=108615000*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 willing to raise external equity capital, in crock up 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 next year. What are your conclusions and recommendations about the feasibility of East Coasts expansion plans?EFN= TA-(TL+E)=108615000*1.2-19539000*1.2+3373500+55341000*1.2=87530405. Most assets can be increased as a percentage of sales. For instance, cash can be increased by any amount. However, unflinching assets oftentimes must be increased in specific amounts because it is impossible, as a practical matter, to buy part of a mod plant 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 content. As a result, to expand production, the company must set up an entirely new line at a cost of $30 million. Calculate the new EFN with this assumption. What does this imply about capacit y 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 will decrease.