# Ryan Boot Company Analysis.

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 BootIndustry

Profit margin\$292,500 ÷ 7,000,0004.18%5.75%

Return on assets\$292,500 ÷ 8,130,0003.60%6.90%

Return on equity\$292,500 ÷ 2,880,00010.16%9.20x

Receivables turnover\$7,000,000 ÷ 3,000,0002.33×4.35x

Inventory turnover\$7,000,000 ÷ 1,000,0007.00×6.50x

Fixed asset turnover\$7,000,000 ÷ 4,000,0001.75×1.85x

Total asset turnover\$7,000,000 ÷ 8,130,0000.86×1.20x

Current ratio\$4,130,000 ÷ 2,750,0001.50×1.45x

Quick ratio\$3,130,000 ÷ 2,750,0001.14×1.10x

Debt to total assets\$5,250,000 ÷ 8,130,00064.58%25.05%

Interest coverage\$700,000 ÷ 250,0002.80×5.35x

Fixed charge coverage(\$700,000 + \$200,000)/\$250,000 + \$200,000 + (\$65,000/ (1-.35)  = \$900,000/\$550,0001.64×4.62x

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.

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