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Ryan boot company analysis. | Business & Finance homework help

Problem:A. Analyze Ryan Boot Company, using ratio analysis. Compute the ratios. B. In your analysis, calculate the overall break-even point in sales […]

Problem:A. Analyze Ryan Boot Company, using ratio analysis. Compute the ratios.
B. In your analysis, calculate the overall break-even point in sales dollars and the cash break-even point.
 
 

Ryan Boot Company
Analysis Ratios

 

 

Ryan Boot

Industry

Profit margin

$292,500 ÷ 7,000,000

4.18%

5.75%

Return on assets

$292,500 ÷ 8,130,000

3.60%

6.90%

Return on equity

$292,500 ÷ 2,880,000

10.16%

9.20x

Receivables turnover

$7,000,000 ÷ 3,000,000

2.33x

4.35x

Inventory turnover

$7,000,000 ÷ 1,000,000

7.00x

6.50x

Fixed asset turnover

$7,000,000 ÷ 4,000,000

1.75x

1.85x

Total asset turnover

$7,000,000 ÷ 8,130,000

0.86x

1.20x

Current ratio

$4,130,000 ÷ 2,750,000

1.50x

1.45x

Quick ratio

$3,130,000 ÷ 2,750,000

1.14x

1.10x

Debt to total assets

$5,250,000 ÷ 8,130,000

64.58%

25.05%

Interest coverage

$700,000 ÷ 250,000

2.80x

5.35x

Fixed charge coverage

($700,000 + $200,000)/$250,000 + $200,000 + ($65,000/ (1-.35)  = $900,000/$550,000

1.64x

4.62x

 
A. Analyze Ryan Boot Company, using ratio analysis. Compute the ratios.
B. In your analysis, calculate the overall break-even point in sales dollars and the cash break-even point.
 
 
 
 
 
 
 
 
 
 
Answer:
 
B. BEP in sales dollars
First we must calculate the contribution margin.
CM = Sales – Variable expenses
CM = $7,000,000 – 4,200,000
CM = $2,800,000
 
Contribution Margin Ratio = CM ÷ Sales
CMR = $2,800,000 ÷ 7,000,000
CMR = 40%
 
BEP = Total Fixed Assets ÷ CMR
BEP = $2,100,000 ÷ 40%
BEP = $5,250,000 in sales dollars
 
Cash BEP = same as above accept the non cash expenses would be removed from the fixed assets per the instructor help.
 
Cash BEP = (TFA – Non Cash expenses) ÷ CMR
Cash BEP = ($2,100,000 – 500,000) ÷ 40%
Cash BEP = $1,600,000 ÷ 40%
 
Cash BEP = $4,000,000

CLICK HERE TO GET THE SOLUTION!!

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