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   $   45       $   36       Accrued wages and taxes   $   40       $   20
Accounts receivable       40           32       Accounts payable       35           24
Inventory       223           148       Notes payable       30           32
Total   $   308       $   216       Total   $   105       $   76
Fixed assets:                           Long term debt:       67           200
Gross plant and equipment   $   255       $   200       Stockholders’ equity:                  
Less: Depreciation       88           40       Preferred stock (4 million shares)   $   4       $   4
Common stock and paid-in
surplus (16 million shares)       16           16
Net plant and equipment   $   167       $   160       Retained earnings       308           104
Other long-term assets       25           24                          
Total   $   192       $   184       Total   $   328       $   124
                                              
Total assets   $   500       $   400       Total liabilities and equity   $   500       $   400
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)   $   800       $   600
Less: Cost of goods sold       320           192
Gross profits   $   480       $   408
Less: Other operating expenses       64           36
Earnings before interest, taxes, depreciation, and
amortization (EBITDA)       416           372
Less: Depreciation       48           30
Earnings before interest and taxes (EBIT)   $   368       $   342
Less: Interest       48           42
Earnings before taxes (EBT)   $   320       $   300
Less: Taxes       96           90
Net income   $   224       $   210
Less: Preferred stock dividends   $   4       $   4
Net income available to common stockholders   $   220       $   206
Less: Common stock dividends       16           16
Addition to retained earnings   $   204       $   190
Per (common) share data:                  
Earnings per share (EPS)   $   13.750       $   12.875
Dividends per share (DPS)   $   1.000       $   1.000
Book value per share (BVPS)   $   20.250       $   7.500
Market value (price) per share (MVPS)   $   15.100       $   12.900
Calculate the following ratios for Lake of Egypt Marina, Inc. as of year-end 2015. (Use sales when computing the inventory turnover and use common stockholders' 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       times
b.   Quick ratio       times
c.   Cash ratio       times
d.   Inventory turnover       times
e.   Days’ sales in inventory       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

a.   Current ratio= current assets/ current liabilities

2015 = 308/105= 2.93 times

2014= 216/76 = 2.84

b.   Quick ratio= (Cash and marketable securities+ AR)/ Current liabilities

2015 = (45+40)/105= 0.81

2014 = (36+32)/76 = 0.89

c.   Cash ratio= Cash and marketable securities/Current liabilities

2015= 45/105= 0.43

2014= 36/76 = 0.47

d.   Inventory turnover= COGS/ Average inventory

2015 = 320/((223+148)/2) = 1.73 times

2014 using closing inventory value since previous years inventory is not given= 192/148= 1.3 times

answered by: anonymous