a Analyze Ryan Boot Company, using ratio analysis Compute the Ryan ratios and compare them to the industry data that are given. Discuss the weak points, strong points, and what you think should be done to improve the company's performance b. Tn 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 for DCL) . 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. , 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 20X27 Specifically examine receivables tumover, inventory turnover, and the profit margi RNF (assume liabilities stay the same) 1 Use the new values to recompute the factors in page 1 RYAN BOOT COMPANY Balance Sheet December 31, 20X1 Assets Liabilities and Stockholders' Equity Cash ..... e 50,000 Accounts payable $2,200,000 Markstable sacurities 80000 Accruad expenses .. 150,000 Accounts receivable 3000000 Notes payable (current) 400,000 Inventory .. 1,000,000 Bonds (10%) 2,500,000 Gross plant and Common stock (1.7 million aquipment 6000000 shares, parvalue $1) 1,700,000 Less: Accumulated depreciation ...... 2,000000 Retained camings 1,180,000 Total liabilities and Total assets -......... $8130,000 stockholders' squity $8,130,000 Income Statement20X1 Sales (credi) $7,000,000 Fixed costs" 2,100,000 Variable costs (0.60) Eamings befora interest and taxes Less: Interest ....... Eamings bafors taxes .. Less: Taxes @ 35%.... Eamings after taxes .. Dividends (40% payout) Increased retained eamings *Fixad costs include (a) lease expansa of $200,000 and (b) depraciation of $500,000. Note: Ryan Baot also has $65.000 per year in sinking fund obligations associated with its bond issue. The sinking fund represents an annual repayment of the principal amount of the bond. Itis not tax-deductible. Ryan Boot (te be filled in) Industry Profit margin 575% Return on assets . 6.90% Retum an equity 920% Receivables tumover 435 x Inventory tumover 850 = Fixed asset turnover . . 1.85 % Total asset turnover. . ......... . P . . . 1.20 x Current ratio 145