East Coast Yachts Case Yacht Industry Ratios Lower Quartile Median Upper Quartil

Question

East Coast Yachts Case 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 6.85 9.15 16.13 Receivables turnover 6.27 11.81 21.45 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% 15.83% Return on equity 9.93% 16.54% 28.14% 1. Calculate all of the ratios listed in the industry table for East Coast Yachts

Explanation / Answer

FOLLOW THIS Answer) 2. Regarding the liquidity ratios, East Coast Yachts current ratio is below the median industry ratio. This implies the company has less liquidity than the industry in general. However, the current ratio is above the lower quartile, so there are companies in the industry with lower liquidity than East Coast Yachts. The company may have more predictable cash flows, or more access to short-term borrowing. The turnover ratios are all higher than the industry median; in fact, all three turnover ratios are above the upper quartile. This may mean that East Coast Yachts is more efficient than the industry in using its assets to generate sales. The financial leverage ratios are all below the industry median, but above the lower quartile. East Coast Yachts generally has less debt than comparable companies, but is still within the normal range. The profit margin for the company is about the same as the industry median, the ROA is slightly higher than the industry median, and the ROE is well above the industry median. East Coast Yachts seems to be performing well in the profitability area. Overall, East Coast Yachts

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