Reference no: EM13844838

Assignment Worksheet

1. Read the closing case "Ratios and Financial Planning at East Coast Yachts" in chapter 3 of your textbook.

2. Based on the information provided, answer the questions below:

Part I:

A. Calculate the following ratios for East Coast Yachts and compare them to those for the industry:

 

	East Coast Yachts	Lower Quartile	Median	Upper Quartile	Positive, Negative, or Neutral Relative to Industry
Current Ratio		0.86	1.51	1.97
Quick Ratio		0.43	0.75	1.01

Asset Management or Turnover Ratios

Calculate and compare to industry ratios:

 

	East Coast Yachts	Lower Quartile	Median	Upper Quartile	Positive, Negative, or Neutral Relative to Industry
Assets Turnover		1.1	1.27	1.46
Inventory Turnover		12.18	14.38	16.43
Receivables Turnover		10.25	17.65	22.43

Long-Term Solvency Ratios

Calculate and compare to industry ratios:

 

	East Coast Yachts	Lower Quartile	Median	Upper Quartile	Positive, Negative, or Neutral Relative to Industry
Debt Ratio		0.32	0.47	0.61
Debt-Equity Ratio		0.51	0.83	1.03
Equity Multiplier		1.51	1.83	2.03
Interest Coverage		5.72	8.21	10.83

Profitability Measures

Calculate and compare to industry ratios:

 

	East Coast Yachts	Lower Quartile	Median	Upper Quartile	Positive, Negative, or Neutral Relative to Industry
Profit Margin		5.02%	7.48%	9.05%
Return on Assets		7.05%	10.67%	14.16%
Return on Equity		9.06%	14.32%	20.83%

B. Based on your calculations and comparisons above, how would you characterize East Coast Yacht's performance relative to its industry?

Part II: Please answer the following questions:

Assuming East Coast Yachts maintains a constant retention ratio,

i. Calculate the firm's internal growth rate: ________

ii. In words, what does this rate mean?

iii. Calculate the firm's sustainable growth rate: ________

iv. In words, what does this rate mean?

Attachment:- Ratios and Financial Planning at East Coast Yachts.pdf