Corporate Finance 4th edition ( Core principals and applications) Chapter 3 Closing case questions 2...
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Corporate Finance 4th edition ( Core principals and applications) Chapter 3 Closing case questions 2 & 3 answers, please
Yacht Industry Ratios Current ratio Quick ratio Total asset turnover Inventory turnover Receivables turnover Debt ratio Debt-equity ratio Equity multiplier Interest coverage Profit margin Return on assets Return on equity LOWER QUARTILE MEDIAN UPPER QUARTILE 1.51 75 1.27 14.38 17.65 49 83 1.83 8.21 748% 10.67% 14.32% 1.97 1.01 1.46 16.43 22.43 .61 1.03 2.03 10.83 86 43 1.10 12.18 .32 .51 1.51 5.72 5.02% 705% 9.06% 9.05% 14.16% 22.41% 1. East Coast Yachts uses a small percentage of preferred stock as a source of financing. In calculating the ratios for the company, should preferred stock be included as part of the company's total equity? Calculate all of the ratios listed in the industry table for East Coast Yachts. Compare the performance of East Coast Yachts to the industry as a whole. For each ratio, comment on why it might be viewed as positive or negative relative to the industry. Suppose you create an inventory ratio calculated as inventory divided by current liabilities. How would you interpret this ratio? How does East Coast Yachts compare to the industry average for this ratio? 2. 3
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