50.1K

Verified Solution

Link Copied!

The financial statements for Castile Products, Incorporated, are given below:

Castile Products, Incorporated Balance Sheet December 31
Assets
Current assets:
Cash	$ 20,000
Accounts receivable, net	190,000
Merchandise inventory	310,000
Prepaid expenses	9,000
Total current assets	529,000
Property and equipment, net	840,000
Total assets	$ 1,369,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities	$ 260,000
Bonds payable, 9%	330,000
Total liabilities	590,000
Stockholders equity:
Common stock, $10 par value	$ 130,000
Retained earnings	649,000
Total stockholders equity	779,000
Total liabilities and stockholders equity	$ 1,369,000

Castile Products, Incorporated Income Statement For the Year Ended December 31
Sales	$ 2,850,000
Cost of goods sold	1,408,000
Gross margin	1,442,000
Selling and administrative expenses	560,000
Net operating income	882,000
Interest expense	29,700
Net income before taxes	852,300
Income taxes (30%)	255,690
Net income	$ 596,610

Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $330,000. All sales were on account.

Required:

Compute the following financial data and ratios:

a. Working capital.

b. Current ratio. (Round your answer to 1 decimal place.)

c. Acid-test ratio. (Round your answer to 2 decimal places.)

d. Debt-to-equity ratio. (Round your answer to 2 decimal places.)

e. Times interest earned ratio. (Round your answer to 2 decimal places.)

f. Average collection period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.)

g. Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.)

h. Operating cycle. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.)

Answer & Explanation Solved by verified expert

See Answer