Answered step by step
Verified Expert Solution

Q: a. Analyze Ryan Boot Company, using ratio analysis. Compute the ratios on the prior page for Ryan and compare them to the industry data that

a. Analyze Ryan Boot Company, using ratio analysis. Compute the ratios on the prior page for Ryan and compare them to the industry data that is given. Discuss the weak points, strong points, and what you think should be done to improve the company's performance.
b. In your analysis, calculate the overall break-even point in sales dollars and the cash break-even point. Also compute the degree of operating leverage, degree of financial leverage, and degree of combined leverage. (Use footnote 2 for DOL and footnote 3 in the chapter for DCL.)
c. Use the information in parts a and b to discuss the risk associated with this company. Given the risk, decide whether a bank should lend funds to Ryan Boot.
Ryan Boot Company is trying to plan the funds needed for 20X2. The management anticipates an increase in sales of 20 percent, which can be absorbed without increasing fixed assets.
d. What would be Ryan's needs for external funds based on the current balance sheet? Compute RNF (required new funds). Notes payable (current) and bonds are not part of the liability calculation.
e. What would be the required new funds if the company brings its ratios into line with the industry average during 20X2? Specifically examine receivables turnover, inventory turnover, and the profit margin. Use the new values to recompute the factors in RNF (assume liabilities stay the same).
f. Do not calculate, only comment on these questions. How would required new funds change if the company
(1) Were at full capacity?
(2) Raised the dividend payout ratio?
(3) Suffered a decreased growth in sales?
(4) Faced an accelerated inflation rate?
A. Analyze Ryan Boot Company, using ratio analysis. Compute the

Income Statement-20X1
Sates (credit)..............................................$7,000,000
Fixed costs*................................................2,100,000
Variable costs (0.60).......................................4,200,000
Earnings before interest and taxes.........................700,000
Less: Interest..................................................250,000
Earnings before taxes.......................................450,000
Less: Taxes @ 35%.......................................................157,500
Earnings after taxes.......................................$ 292,500
Dividends (40% payout)....................................117,000
Increased retained earnings..............................$ 175,500
*Fixed costs include (a) lease expense of $200,000 and (b) depreciation of $500,000

A. Analyze Ryan Boot Company, using ratio analysis. Compute the

RYAN BOOT COMPANY Balance Sheet December 31, 20Xl Assets Liabilities and Stockholders' Equity Ca S 50,000 Accounts pavable Accounts receivable Inventory Gross plant and equipment 80,000 3,000,000 1.000.000 $2,200,000 150,000 400.000 2,500.000 6,000,00 Common stock (1.7 million ,700,000 Accrued expenses Notes payable (current) Bonds (10%) shares, par value S1) Retained earnings Total liabilities and ess Accumulated depreciation... 2.000,000 1,180,000 $8,130,000 Total assets $8,130,000 stockholders' equity.. Ratios Ryan Boot (to be filled in) Profit margin Returm on assets Return on equitv Receivables turmover Inventorv turmover Fixed-asset turmover Total-asset turmover Current ratio Quick ratio Debt to total assets Interest coverage Fixed charge coverage Industry 5.75% 6.90% 9.20% 4.35X 6.50X 1.85X 1.20X 1.45X 1.10X 25.05% 5.35X 4.62X

Step by Step Solution

3.43 Rating (166 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Link Copied!

Step: 1

Ryan Boot Company a Ratio analysis Ryan Industry Profit margin 2925007000000 418 575 Return on assets 2925008130000 360 690 Return on equity 2925002880000 1016 920 Receivable turnover 70000003000000 2... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get a step-by-step solution from a verified subject matter expert – not AI-generated answers

Step: 2Unlock detailed examples and clear explanations to master concepts

blur-text-image_2

Step: 3Unlock to practice, ask and learn with real-world examples

blur-text-image_3

Document Format ( 1 attachment)

Word file Icon

1122-B-F-F-M(8417).docx

120 KBs Word File

See step-by-step solutions with expert insights and AI powered tools for academic success

  • tick Icon Access 30 Million+ textbook solutions.
  • tick Icon Ask unlimited questions from AI Tutors.
  • tick Icon 24/7 Expert guidance tailored to your subject.
  • tick Icon Order free textbooks.

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foundations of Financial Management

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen

16th edition

125927716X, 978-1259687969, 1259687961, 978-1259277160

More Books
flashcard-anime

Study Smart with AI Flashcards

Access a vast library of flashcards, create your own, and experience a game-changing transformation in how you learn and retain knowledge

Explore Flashcards

Students Have Also Explored These Related Finance Questions!