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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
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 Submitted On 03 Feb, 2015 04:24:22
 Johnson7
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