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Coast4Life

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COAST4LIFE
Prepared For: Coast4Life Board of Directors
From: Pat Brown, Controller
December 06, 2013

Introduction
This report will analyze the current situation of Coast4Life and evaluate four strategic alternatives for the Board of Directors to effectively maintain an after-tax rate of return of sixteen percent. Upon evaluation of the four alternatives, conclusions will be drawn and recommendations will be made on the best alternative action to take to meet the overall goal of remaining profitable during an anticipated downturn forecasted for the 2013.
Ratio Analysis * In 2010, the current ratio was 0.64. However, in 2011 and 2012, the current ratio increased from 1.21 to 1.75. Increased cash and marketable securities have resulted in Coast4Life becoming more liquid. * Asset Turnover ratio increased from 0.52 in 2010 to 0.74 in 2012. This shows effective use of the assets employed by Coast4Life. * The debt-to-equity ratio saw a decline from 1.89 in 2010 to 1.45 in 2012. Also, total debt-to-total assets decreased from 0.65 in 2010 to 0.59 in 2012. The debt-to-equity ratio of 1.45 in 2012 and the total debt-to-total assets ratio of 0.59 are a positive predictor in indicating the company’s ability to sustain losses and still meet obligations to creditors. * The profitability ratios increased from 2010 to 2012. A return on equity ratio of 27.4% in 2012, up from 15.1% in 2010, is due to the increased revenue from the Dry Dock. The return-on-assets saw a gradual climb from 5.24% in 2010 to 11.2% in 2012. Aging of ships may be a result of increase. * Based on the forecasted downturn in the cruise industry (Appendix 2), Net Income is budgeted to decrease to $5,149K in 2013.

Strategic Alternatives

Divest in Fraser Dry Dock
Part of Coast4Life’s mission is to maximize the safety of customers, staff and marine life by ensuring that the ships used are well

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