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East Coast Yacht Company Case Study Essay

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East Coast Yachts Company Case Study Group 4 Julie Ciarlante Mary Kathryn LoConte Ivy Perez David Zhu East Coast Yachts Background • ECY started in 2002 as a Limited Liability Company (LLC) with the mission of creating custom, high performance yachts for the pleasure sailor. • A commitment to safety, reliability and customer satisfaction helped the company grow steadily for the first seven years in business. • In 2009, the economic downturn and credit crunch hit the boat industry hard and kept the industry flat through 2010. East Coast Yachts Today • ECY was able to survive the most devastating years in the industry’s recent history. • In 2011 business started to pick up and by 2012 ECY was maximizing shareholder …show more content…

Liquidity is lower as compared to the industry, however, the current ratio of 0.74 is above the lower quartile, and this indicates that there are companies with lower liquidity than ECY. This is negative. • The quick ratio is higher than the industry median, this implies that ECY has fewer inventories to current liabilities than the industry median because the cash ratio is lower. The company may have more predictable cash flows, or more access to short term borrowing. This is positive. East Coast Yachts – Question 2 EFFICIENCY RATIOS • The turnover ratios are all higher than the industry upper quartile. This would imply that ECY is more efficient in the use of assets as compared to the industry average. This is positive. • Days sales in inventory is 16 days and days sales in receivables is 10 days for ECY. The competition holds inventory for 40 days and takes 30 days to collect on receivables. Both ratios for ECY are lower than the competition and they are less likely to generate debt and less cash is tied up in assets. This is positive. East Coast Yachts – Question 2 LEVERAGE RATIOS • The financial leverage ratios are all below the industry median, but above the lower quartile. This implies that ECY has less debt than comparable

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