In: Finance
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) |
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2015 | 2014 | 2015 | 2014 | |||||||||
Assets | Liabilities and Equity | |||||||||||
Current assets: | Current liabilities: | |||||||||||
Cash and marketable securities | $ | 80 | $ | 42 | Accrued wages and taxes | $ | 40 | $ | 30 | |||
Accounts receivable | 120 | 66 | Accounts payable | 90 | 60 | |||||||
Inventory | 222 | 168 | Notes payable | 50 | 54 | |||||||
Total | $ | 422 | $ | 276 | Total | $ | 180 | $ | 144 | |||
Fixed assets: | Long term debt: | 502 | 246 | |||||||||
Gross plant and equipment | $ | 630 | $ | 360 | Stockholders’ equity: | |||||||
Less: Depreciation | 102 | 72 | Preferred stock (6 million shares) | $ | 6 | $ | 6 | |||||
Common stock
and paid-in surplus (54 million shares) |
54 | 54 | ||||||||||
Net plant and equipment | $ | 528 | $ | 288 | Retained earnings | 258 | 150 | |||||
Other long-term assets | 50 | 36 | ||||||||||
Total | $ | 578 | $ | 324 | Total | $ | 318 | $ | 210 | |||
Total assets | $ | 1,000 | $ | 600 | Total liabilities and equity | $ | 1,000 | $ | 600 | |||
LAKE OF EGYPT MARINA, INC. Income Statement for Years Ending December 31, 2015 and 2014 (in millions of dollars) |
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2015 | 2014 | ||||
Net sales (all credit) | $ | 600 | $ | 500 | |
Less: Cost of goods sold | 240 | 210 | |||
Gross profits | $ | 360 | $ | 290 | |
Less: Other operating expenses | 36 | 29 | |||
Earnings before interest, taxes, depreciation,
and amortization (EBITDA) |
324 | 261 | |||
Less: Depreciation | 30 | 30 | |||
Earnings before interest and taxes (EBIT) | $ | 294 | $ | 231 | |
Less: Interest | 54 | 41 | |||
Earnings before taxes (EBT) | $ | 240 | $ | 190 | |
Less: Taxes | 72 | 57 | |||
Net income | $ | 168 | $ | 133 | |
Less: Preferred stock dividends | $ | 6 | $ | 6 | |
Net income available to common stockholders | $ | 162 | $ | 127 | |
Less: Common stock dividends | 54 | 54 | |||
Addition to retained earnings | $ | 108 | $ | 73 | |
Per (common) share data: | |||||
Earnings per share (EPS) | $ | 3.000 | $ | 2.352 | |
Dividends per share (DPS) | $ | 1.000 | $ | 1.000 | |
Book value per share (BVPS) | $ | 5.778 | $ | 3.778 | |
Market value (price) per share (MVPS) | $ | 14.800 | $ | 12.600 | |
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 a.
Current Ratio = Current Assets / Current Liabilities
Current Ratio = $422 / $180
Current Ratio = 2.34 times
Answer b.
Quick Ratio = (Current Assets - Inventory) / Current
Liabilities
Quick Ratio = ($422 - $222) / $180
Quick Ratio = 1.11 times
Answer c.
Cash Ratio = Cash and Marketable Securities / Current
Liabilities
Cash Ratio = $80 / $180
Cash Ratio = 0.44 times
Answer d.
Average Inventory = ($222 + $168) / 2
Average Inventory = $195
Inventory Turnover = Sales / Average Inventory
Inventory Turnover = $600 / $195
Inventory Turnover = 3.08 times
Answer e.
Days’ Sales in Inventory = 365 / Inventory Turnover
Days’ Sales in Inventory = 365 / 3.08
Days’ Sales in Inventory = 118.51 days
Answer f.
Average Accounts Receivable = (120 + $66) / 2
Average Accounts Receivable = $93
Average Collection Period = 365 * Average Accounts Receivable /
Sales
Average Collection Period = 365 * $93 / $600
Average Collection Period = 56.58 days.