Ratios and Financial Planning at East Coast Yachts
Yacht Industry Ratios
Lower Quartile
Median
Upper Quartile
Current ratio
0.50
1.43
1.89
Quick ratio
0.21
0.38
0.62
Total asset
turnover
0.68
0.85
1.38
Inventory
turnover
4.89
6.15
10.89
Receivables
turnover
6.27
9.82
14.11
Debt ratio
0.44
0.52
0.61
Debt-equity
ratio
0.79
1.08
1.56
Equity multiplier
1.79
2.08
2.56
Interest
coverage
5.18
8.06
9.83
Profit margin
4.05%
6.98%
9.87%
Return on
assets
6.05%
10.53%
13.21%
Return on
equity
9.93%
16.54%
36.15%
1.
Calculate all of the ratios listed in the industry table for East Coast yachts.
1.
The calculations for the ratios listed are:
Current ratio
= $14,651,000 / $19,539,000
= 0.75 times
Quick ratio
= ($14,651,000 – 6,136,000) / $19,539,000
= 0.44 times
Total asset turnover
= $167,310,000 / $108,615,000
= 1.54 times
Inventory turnover
= $117,910,000 / $6,136,000
=19.22 times
Receivables turnover
= $167,310,000 / $5,473,000
= 30.57 times
Total debt ratio
= ($108,615,000 – 55,341,000) / $108,615,000 = 0.49 times
Debt-equity ratio
= ($19,539,000 + 33,735,000) / $55,341,000
= 0.96 times
Equity multiplier
= $108,615,000 / $55,341,000
= 1.96 times
Interest coverage
= $23,946,000 / $3,009,000
= 7.96 times
Profit margin
= $12,562,200 / $167,310,000
= 7.51%
Return on assets
= $12,562,200 / $108,615,000
= 11.57%
1