1. calculate the sustainable growth rate of east coast yachts. calculate efn and prepare the pro forma income statements and balance sheets assuming growth at precisely this rate. 2. east coast yachts is unlikely to be willing to raise external equity capital, in part because the owners don't want to dilute their existing ownership and control positions. however, eazt coast yachts is planning for a growth rate of 20 percent next year. what are your conclusions and recommendations about feasibility of their expansion plans?

Dan Ervin was recently hired by East Coast Yachts to assist the company with its short-term financial planning and also to evaluate the company's financial performance. Dan graduated from college five years ago with a finance degree, and he has been employed in the treasury East Coast Yachts was founded 10 years ago by Larissa Warren. The company's operations LLC. The company has manufactured custom midsize, high-performance yachts for clients RATIOS AND FINANCIAL PLA AT EAST COAST YACHTS department of a Fortune 500 company since then. over this period, and its products have received high reviews for safety and reliability. The company's yachts also have recently received the highest award for customer satisfaction. The yachts are primarily purchased by wealthy individuals for pleasure use. Occasionally, a yache is manufactured for purchase by a company for business purposes. The custom yacht industry is fragmented with a number of manufacturers. As with any industry, there are market leaders, but the diverse nature of the industry ensures that no man facturer dominates the market. The competition in the market, as well as the product cost. CHAPTER 3 Financial Statements Analysis and Financial Models 83 EAST COAST YACHTS 2019 Income Statement Sales Cost of goods sold Other expenses Depreciation Earings before interest and taxes (EBIT) Interest Taxable income Taxes (21%) Net income Dividends Additions to retained earnings $231.900.000 170,157,000 27.711,200 7,566.900 $ 26,464.900 4,170,100 $ 22,294,800 4,681,908 $ 17,612,892 $7.925,000 $9,687,892 EAST COAST YACHTS Balance Sheet as of December 31, 2019 Liabilities & Equity Assets Current liabilities Accounts payable Notes payable Total $ 3,614,200 6,501,900 7.290,100 $ 17,406,200 Current assets Cash Accounts receivable Inventory Total Fixed assets Net plant and equipment $ 6,977.700 15,776,900 $ 22,754,600 $ 40,100,000 Long-term debt $111.629,300 Shareholders' equity Common stock Retained earnings Total equity Total liabilities and equity $ 6,140,000 60.040.900 $ 66,180,900 $129.035,500 $129.035.500 Total assets Yacht Industry Ratios Median Upper Quartile Lower Quartile .50 .21 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 .68 6.85 6.27 .44 .79 170 1.79 5.18 4.05% 1.43 .38 .85 9.15 11.81 52 1.08 2.08 8.06 6.98% 10.53% 16.54% 1.89 .62 1.38 16.13 21.45 .61 1.56 2.56 9.83 9.87% 15.83% 28.14% 6.05% 9.93%