Question

Use the following financial statements for Lake of Egypt Marina, Inc.

LAKE OF EGYPT MARINA, INC Balance Sheet as of December 31, 2015 and 2014 (in millions of dollars)
	2015			2014				2015			2014
Assets							Liabilities and Equity
Current assets:							Current liabilities:
Cash and marketable securities	$	44		$	42		Accrued wages and taxes	$	28		$	30
Accounts receivable		36			36		Accounts payable		32			36
Inventory		153			63		Notes payable		36			42
Total	$	233		$	141		Total	$	96		$	108
Fixed assets:							Long term debt:		51			90
Gross plant and equipment	$	212		$	186		Stockholders’ equity:
Less: Depreciation		65			45		Preferred stock (3 million shares)	$	3		$	3
							Common stock and paid-in      surplus (21 million shares)		21			21
Net plant and equipment	$	147		$	141		Retained earnings		229			78
Other long-term assets		20			18
Total	$	167		$	159		Total	$	253		$	102
Total assets	$	400		$	300		Total liabilities and equity	$	400		$	300

LAKE OF EGYPT MARINA, INC. Income Statement for Years Ending December 31, 2015 and 2014 (in millions of dollars)
	2015			2014
Net sales (all credit)	$	500		$	300
Less: Cost of goods sold		180			105
Gross profits	$	320		$	195
Less: Other operating expenses		30			15
Earnings before interest, taxes, depreciation, and amortization (EBITDA)		290			180
Less: Depreciation		20			12
Earnings before interest and taxes (EBIT)	$	270		$	168
Less: Interest		20			18
Earnings before taxes (EBT)	$	250		$	150
Less: Taxes		75			45
Net income	$	175		$	105
Less: Preferred stock dividends	$	3		$	3
Net income available to common stockholders	$	172		$	102
Less: Common stock dividends		21			21
Addition to retained earnings	$	151		$	81
Per (common) share data:
Earnings per share (EPS)	$	8.190		$	4.857
Dividends per share (DPS)	$	1.000		$	1.000
Book value per share (BVPS)	$	11.905		$	4.714
Market value (price) per share (MVPS)	$	15.250		$	13.050

Calculate the following ratios for Lake of Egypt Marina, Inc. as of year-end 2015. (Use sales when computing the inventory turnover and use total equity when computing the equity multiplier. Round your answers to 2 decimal places. Use 365 days a year.)

LAKE OF EGYPT MARINA, INC.
a.	Current ratio		2.43 times
b.	Quick ratio		0.83 times
c.	Cash ratio		0.46 times
d.	Inventory turnover		3.27 times
e.	Days’ sales in inventory		111.69 days
f.	Average collection period		days
g.	Average payment period		days
h.	Fixed asset turnover		times
i.	Sales to working capital		times
j.	Total asset turnover		times
k.	Capital intensity		times
l.	Debt ratio		%
m.	Debt-to-equity		times
n.	Equity multiplier		times
o.	Times interest earned		times
p.	Cash coverage		times
q.	Profit margin		%
r.	Gross profit margin		%
s.	Operating profit margin		%
t.	Basic earnings power		%
u.	ROA		%
v.	ROE		%
w.	Dividend payout		%
x.	Market-to-book ratio		times
y.	PE ratio		times

Answer 1

Since you have got the answer to first five in the table I would be answering the remaining questions.

(f) The formula for the average collection period is:

= 36*365/500 = 26.28

(g) Average payment period =

Where, Net Credit Purchases = COGS + Ending Inventory - Begining Inventory
= 180+153-63 = 270

Therefore Average Payment Period = 34*365/270 = 45.96

(h) Fixed Asset Turnover =

=   

=3.06

(i)Sales to Working Capital = Net Sales/Average Working Capital

Working Capital (2015)= Current Assets - Current Liabilities
= 233 - 96 = 137

Working Capital(2014) = 141-108 = 33
Average W = (137+33)/2 = 85

Sales to WC ratio = 500/85 = 5.88

(j) Total Asset Turnover = Net Sales/Average total Assets

= 500/350= 1.42