CHAPTER 3
RATIOS AND FINANCIAL PLANNING AT
EAST COAST YACHTS
1.
The calculations for the ratios listed are:
Current ratio = $11,270,000 / $15,030,000
Current ratio = 0.75 times
Quick ratio = ($11,270,000 – 4,720,000) / $15,030,000
Quick ratio = 0.44 times
Total asset turnover = $128,700,000 / $83,550,000
Total asset turnover = 1.54 times
Inventory turnover = $90,700,000 / $4,720,000
Inventory turnover = 19.22 times
Receivables turnover = $128,700,000 / $4,210,000
Receivables turnover = 30.57 times
Total debt ratio = ($83,550,000 – 42,570,000) / $83,550,000
Total debt ratio = 0.49 times
Debt-equity ratio = ($15,030,000 + 25,950,000) / $42,570,000
Debt-equity ratio = 0.96 times
Equity multiplier = $83,550,000 / $42,570,000
Equity multiplier = 1.96 times
Interest coverage = $18,420,000 / $2,315,000
Interest coverage = 7.96 times
Profit margin = $9,663,000 / $128,700,000
Profit margin = 7.51%
Return on assets = $9,663,000 / $83,550,000
Return on assets = 11.57%
Return on equity = $9,663,000 / $42,570,000
Return on equity = 22.70%