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Larissa approached Dan about the company?s perform...




Larissa approached Dan about the company?s performance and future growth plans. First, Larissa wants to find out how East Coast Yachts is performing relative to its peers. Additionally, she wants to find out the future financing necessary to fund the company?s growth. Larissa hoped that Dan would be able to estimate the amount of capital the company would have to raise next year so that East Coast Yachts would be better prepared to fund its expansion plans. To get Dan started with his analyses, Larissa provided the following financial statements. Dan then gathered the industry ratios for the yacht manufacturing industry. EAST COAST YACHTS 2010 Income Statement Sales $617,760,000 Cost of goods sold 435,360,000 Selling, general, & admin 73,824,000 Depreciation 20,160,000 Earnings before interest and taxes (EBIT) $ 88,416,000 Interest Expense 11,112,000 EBT $ 77,304,000 Taxes 30,921,600 Net income $46,382,400 Dividends $ 17,550,960 retained earnings $ 28,831,440 EAST COAST YACHTS Balance Sheet as of 2010 Assets Liabilities & Equity Current assets Current liabilities Cash $ 11,232,000 Accounts payable $ 24,546,000 Accounts receivable 20,208,000 Notes payable 18,725,000 Inventory 22,656,000 Accrued Expense 6,185,000 Other 1,184,000 Total $55,280,000 Total $49,456,000 Fixed assets $462,030,000 Long-term debt $146,560,000 Less depreciation (114,996,000) Net property,plant, equip $347,034,000 Intangible assets and others 6,840,000 Totalfixed assets $353,874,000 Total assets $409,154,000 STOCKholders? equity Preferred Stock $3,000,000 Common stock $ 40,800,000 Capital Surplus $31,200,000 Retained earnings 186,138,,000 Less Treasury Stock (48,000,000) Total equity $213,138,000 Total liabilities and equity $409,154,0000 Yacht Industry Ratios Lower Quartile Median Upper Quartile Current ratio 0.86 1.51 1.97 Quick ratio 0.43 0.75 1.01 Total asset turnover 1.10 1.27 1.46 Inventory turnover 12.18 14.38 16.43 Receivables turnover 10.25 17.65 22.43 Debt ratio 0.32 0.47 0.61 Debt-equity ratio 0.51 0.83 1.03 Equity multiplier 1.51 1.83 2.03 Interest coverage 5.72 8.21 10.83 Profit margin 5.02% 7.48% 9.05% Return on assets 7.05% 10.67% 14.16% Return on equity 9.06% 14.32% 20.83% 6.. Most assets can be increased as a percentage of sales. For instance, cash can be increased by any amount. However, fixed assets must be increased in specific amounts because it is impossible, as a practical matter, to buy part of a new plant or machine. In this case, a company has a "staircase" or "lumpy" fixed cost structure. Assume East Coast Yachts is currently producing at 100 percent capacity and sales are expected to grow at 20 percent. As a result, to increase production, the company must set up an entirely new line at a cost of $95,000,000 Prepare the pro forma income statement and balance sheet. What is the new EFN with these assumptions? What does this imply about capacity utilization for the company next year?,Current Ratio Current assets / Current liabilities 1.12 Quick Ratio Current assets - Inventories / Current liabilities 0.66 Total asset turnover Sales / Total assets 1.51 Inventory turnover Cost of goods sold / Inventory 19.22 Receivables turnover Sales / Accounts receivable 30.57 Debt ratio Total assets - Total equity / Total assets 0.48 Debt-equity ratio Total debt / Total equity 0.92 Equity multiplier Total assets / Total equity 1.92 Interest coverage EBIT / Interest 7.96 Profit margin Net income / Sales 7.51% Return on assets Net income / Total assets 11.34% Return on equity Net income / Total equity 21.76% thats the answer i got,can you help me, why is it different?


Paper#5602 | Written in 18-Jul-2015

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