Finance question
 Budget: $4 Normal
 Subjects: Business  Ethnography 
 Due on 03 Feb, 2018 04:26:21
 Asked on 03 Feb, 2018 04:26:21
 Past Due (date has already expired)
Problem:
A. Analyze Ryan Boot Company, using ratio analysis. Compute the ratios.
B. In your analysis, calculate the overall breakeven point in sales dollars and the cash breakeven 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 breakeven point in sales dollars and the cash breakeven 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
Write an assessment to address the following problems/questions:
1. Assess how diversification benefits the investor. Can you imagine circumstances where an investor would not want to diversify? Discuss why or why not.
2. ...