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The Bullock Gold Mining and a Job at East Coast Yachts - Essay Example

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The Bullock Gold Mining and a Job at East Coast Yachts

atio. This shows that the firm has less liquidity compared to the industry. Current ratio is greater than the lower quartile this implies that there exist other firms with less liquidity within the industry (Ehrhardt & Eugene, 91). The firm may posses more expected cash flows, or easier means to short-term debt. The turnover ratios appear to be greater compared to the industry median actually all are greater than the upper quartile. This implies that the firm utilizes its assets efficiently to generate sales. The financial leverage ratios appear to be lower than the industry median but higher than the lower quartile. ...
East Coast Yachts’ has a satisfactory performance, although attention is needed in the liquidity ratios. c) Creating Inventory Ratio Inventory to current liabilities ratio East Coast Yachts is lower, the current ratio is lower, but the quick ratio is higher in comparison to the industry median. This means that East Coast Yachts has few stock to current liabilities compared to the industry median (Ehrhardt & Eugene, 92). Since the cash ratio is less compared to the industry median, East Coast Yachts has fewer stock compared to the industry median, but more accounts receivable. d)Interpretation of the Ratios Current ratio: Good (Well managed current accounts.) Bad (Liquidity issues) Quick ratio: Good (Well managed current accounts.) Bad (Liquidity issues) Total asset turnover: Good (Well utilized assets.) Bad (Old and depreciated assets) Inventory turnover: Good (Well managed inventory) Bad (Inventory shortages) Receivables turnover: Good (Well collected receivables) Bad (Strict credit terms) Total debt ratio: Good (Hard to get credit issues) Bad (Increase shareholder returns) Debt equity Ratio: Good (Hard to get credit issues) Bad (Increase shareholders equity) Equity multiplier: Good (Hard to get credit issues) Bad (Increase shareholders equity) Interest coverage: Good (Hard to get CREDIT ISSUES) Bad (Increase shareholders equity) Profit margin: Good (Good performance) (Bad: Good cost control) Question 3 a)Internal growth rate, ROE = (Net income)/(Total equity) = $12,562,200/$ 55,341,000 = 0.2270 or 22.70% b (Addition to Retained earnings)/(Net income) = $5,024,800/$12,562,200 = 0.40 or 40% Sustainable growth rate = (ROE ? b)/(1-(ROE ? b)) = (0.2270 ? 0.40)/(1-(0.2270 ? 0.40)) = 0.0999 or 9.99% Income Statement Sales ...Show more

Summary

Name: Professor: Course: Date: Part 1 Question 1   a) Current ratio = Current assets/ Current liabilities $14,651,000 / $19,539,000 = 0.75times Quick ratio = (Current assets – Inventory)/ Current liabilities ($14,651,000 - 6,136,000) / $19,539,000 = 0.44times Total asset turn over = (Sales/ Total assets) $167,310,000 / $108,615,000 = 1.54times Inventory turnover = Costs of goods sold/Inventory $117,910,000 / $6,136,000 =19.22times Receivables turnover = Sales/ Accounts receivables $167,310,000 / $5,473,000 = 30.57times Total debt ratio = (Total assets- Total equity)/ Total assets ($108,615,000 ?…
Author : dallinmueller
The Bullock Gold Mining and a Job at East Coast Yachts essay example
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