Name:_______________________

FIN 350: Managerial Finance

Assignment 3 - Due June 6, 2018

Calculate the following ratios for Luverne Lake Marina, Inc. as of year-end 2014 and 2015.Summarize the overall performance of the Marina and whether their performance improved or worsened over the period.Compare Luverne Lake Marina to the industry and point out strengths and weaknesses.

Also Construct the DuPont ROA and ROE breakdowns for Luverne Lake Marina, Inc. for 2015 and calculate both the internal and sustainable growth rates for 2015.(40 pts.)

.Industry

Current ratio2.0 times

Quick ratio1.2 times

Inventory turnover ratio3.60 times

Average collection period32.50 days

Fixed asset turnover ratio1.25 times

Sales to working capital4.25 times

Total asset turnover ratio0.85 times

Capital intensity ratio1.18 times

Debt ratio62.50%

Debt-to-equity ratio1.67 times

Equity multiplier2.67 times

Times interest earned8.50 times

Profit margin28.75%

ROA19.75%

ROE36.88%

Dividend payout ratio35%

Market-to-book ratio2.55 times

PE ratio15.60 times

Luverne Lake Marina, Inc.

Balance Sheet as of December 31, 2014 and 2015

(in millions of dollars)

Assets20142015Liabilities & Equity 20142015

Current assets:Current liabilities:

Cash and marketableAccrued wages and

securities$65 $75 taxes$43$40

Accounts receivable110115Accounts payable8090

Inventory190200Notes payable7080

Total $365 $390Total$193$210

Fixed assets:Long-term debt:$280$300

Gross plant and

equipment$471$580 Stockholders' equity:

Less: Depreciation100110Preferred stock (5 million shares)$5$5

Net plant and Common stock and

equipment$371$470paid-in surplus 6565

Other long-term assets4950(65 million shares)

Total $420$520Retained earnings242330

Total$312$400

Total assets $785$910Total liabilities and equity$785$910

Luverne Lake Marina, Inc.

Income Statement for Years Ending December 31, 2014 and 2015

(in millions of dollars)

2014 2015

Net sales (all credit)$ 432 $515

Less: Cost of goods sold200260

Gross profits232255

Less: Depreciation2022

Earnings before interest and taxes (EBIT)212233

Less: Interest3033

Earnings before taxes (EBT)182200

Less: Taxes55 57

Net income$ 127$ 143

Less: Preferred stock dividends$5$5

Net income available to common stockholders$ 122$ 138

Less: Common stock dividends$65 $65

Addition to retained earnings$57$73

Per (common) share data:

Earnings per share (EPS)$1.877$2.123

Dividends per share (DPS)$1.000$1.000

Market value (price) per share (MV)$12.550 $14.750