if you are satisfied accept it and leave positive feedback.
A. Calculate the following ratios for East Coast Yachts and compare them to
those for the industry:
Liquidity or Short-Term Solvency Ratios
Calculate and compare to industry ratios:
East
Coast
Yachts
Current
Ratio
Quick
Ratio
0.75
0.44
Lower Median Upper
Positive,
Quartile
Quartile Negative, or
Neutral
Relative to
Industry
0.50
1.43
1.89 negative
0.21
0.38
0.62
positive
Asset Management or Turnover Ratios
Calculate and compare to industry ratios:
East
Lower Median Upper
Positive,
Coast Quartile
Quartile Negative, or
Yachts
Neutral
Relative to
Industry
1.54
positive
0.68
0.85
1.38
Assets
Turnover
Inventory 19.22
Turnover
Receivables 30.57
Turnover
4.89
6.15
10.89
positive
6.27
9.82
14.11
positive
Long-Term Solvency Ratios
Calculate and compare to industry ratios:
East
Coast
Yachts
Debt
Ratio
DebtEquity
Ratio
Equity
Multiplier
Interest
Coverage
0.49
Lower Median Upper
Positive,
Quartile
Quartile Negative, or
Neutral
Relative to
Industry
positive
0.44
0.52
0.61
.99
0.79
1.08
1.56
positive
1.96
1.79
2.08
2.56
neutral
7.96
5.18
8.06
9.83
neutral
Profitability Measures
Calculate and compare to industry ratios:
East
Coast
Yachts
Profit 7.51
Margin
Return on 11.57
Assets
Return on 22.70
Equity
Lower Median Upper
Positive,
Quartile
Quartile Negative, or
Neutral
Relative to
Industry
positive
4.05% 6.98% 9.87%
6.05% 10.53% 13.21%
positive
9.93% 16.54% 26.15%
positive
B. Based on your calculations and comparisons above, how would you characterize East Coast Yacht's
performance relative to its industry?
Except for current ratio, in all other ratios the company is neutral means near to median and in most of
the ratios it is positive means more than median. Overall company’s performance is satisfactory.
Company’s inventory turnover is more than the industry and company’s debt ratios are less than
industrial average, it means that company rely less on debt as compare to industrial average.
Part II: Please answer the following questions:
A. Assuming East Coast Yachts maintains a constant retention ratio,
i. Calculate the firm's internal growth rate: 0.46 or 46%
ii. In words, what does this rate mean?
retained earnings / total assets. It means the level of growth achievable with outside financing.
iii. Calculate the firm's sustainable growth rate: __9.08 %______
iv. In words, what does this rate mean?
The maximum growth rate that a firm can sustain without increasing financial leverage.
Calculated as:
ROE x (1 - dividend-payout ratio)