Essay on East Coast Yachts Cash Flow Analysis

1124 Words Oct 26th, 2011 5 Pages
Analyze company cash flows East Coast Yachts has a strong operating cash flow highlighted by strong earnings before interest and taxes of $88,416,000. With the addition of $20,160,000 in depreciation and subtraction of $30,921,000 in taxes, they managed an operating cash flow of $77,654,400. East Coast Yachts appears to be in or approaching a growth mode with their capital spending on fixed assets increasing by $60,000,000 during the fiscal year. However, they made the wise move of reducing the effect of this expenditure with the sale of $6,786,000 of fixed assets already on the books. Further growth is evidenced by the positive net working capital cash flow of $4,670,560, a sign of a growing company. East Coast Yachts is making …show more content…
They have a healthy current ratio and quick (acid-test) ratio of 1.12 and .66 respectively. This positive outlook is further supported by their long-term solvency / financial leverage ratios. East Coast Yachts have an average debt ratio at .48. This reflects that for every dollar generated by assets $.48 goes to cover their liabilities. But, that also means that $.52 of every dollar generated by their assets goes to retained earnings. East Coast Yachts really shines based on their asset utilization ratios. Their inventory turnover is excellent and shows they are currently turning over their inventory 19.22 times a year. This is good given the current economy and companies do not want to keep a large amount of unsold inventory on hand. Another great indicator of their financial standing is a healthy accounts receivable turnover ratio of 30.57. This indicates that they are retiring and issuing new credit every 30.57 days. This is an outstanding number given that their product is a high-end, expensive luxury item. By gathering more information regarding East Coast Yachts profitability ratios it comes to light that they maintained an average profit margin and return on assets. Their profitability margin of 7.51% is comparable to the industry average 7.48%. This can also be said of their 11.34% return on assets when compared to the industry average of 10.67%. However, their return on

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