3. Compare the performance of East Coast Yachts to the Industry as a whole.

a. For each ratio, comment on why it might be viewed as positive or negative relative to the industry

b. 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?

The ratios are included for your reference.

Yacht Industry Ratios
Ratio	Lower Quartile	Median	Upper Quartile	East Coast Yachts
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	0.56	0.61	-
Debt-equity ratio	0.83	1.13	1.44	-
Equity multiplier	1.83	2.13	2.44	-
Interest coverage	5.72	8.21	10.83	-
Profit margin	5.02%	7.48%	9.05%	0.00%
Return on assets	7.05%	10.67%	14.16%	0.00%
Return on equity	14.06%	19.32%	26.41%	0.00%

2017 Income Statement

Sales

$611,582,000

Cost of Goods Sold

431,006,000

Selling, general & admin expenses

73,085,700

Depreciation

19,958,400

EBIT

$87,531,900

Interest expense

11,000,000

EBT

$76,531,900

Taxes

30,612,400

Net Income

$45,919,500

Dividends

$17,374,500

Retained Earnings

2017 Balance Sheet
Current Assets			Current liabilities
Cash and equivalents	$11,119,700		Accounts payable	$44,461,550
Accounts receivable	18,681,500		Accrued expenses	6,123,200
Inventory	20,149,650		Total current liabilities	$50,584,750
Other	1,172,200
Total current assets	$51,123,050
Fixed assets			Long-term debt	$169,260,000
Property, plant and equipment	$457,509,600		Total long-term liabilities	$169,260,000
Less accumulated depreciation	(113,845,900)
Net property, plant and equipment	$343,663,700
Intangible assets and others	6,772,000		Stockholders' equity
Total fixed assets	$350,435,700		Preferred stock	$1,970,000
			Common stock	37,583,700
			Capital surplus	28,116,300
			Accumulated retained earnings	161,564,000
			Less treasury stock	(47,520,000)
			Total equity	$181,714,000
Total assets	$401,558,750		Total liabilities and shareholders' equity	$401,558,750

$28,544,100