Castile Products, Inc.

Balance Sheet

December 31

Assets

Current assets:

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,500

Accounts receivable, net . . . . . . . . . . . . . . . . 35,000

Merchandise inventory . . . . . . . . . . . . . . . . . 70,000

Prepaid expenses . . . . . . . . . . . . . . . . . . . . . 3,500

Total current assets . . . . . . . . . . . . . . . . . . . . . . 115,000

Property and equipment, net . . . . . . . . . . . . . . . 185,000

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $300,000

Liabilities and Stockholders Equity

Liabilities:

Current liabilities . . . . . . . . . . . . . . . . . . . . . . $ 50,000

Bonds payable, 10% . . . . . . . . . . . . . . . . . . . 80,000

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 130,000

Stockholders equity:

Common stock, $5 per value . . . . . . . . . . . . . $ 30,000

Retained earnings . . . . . . . . . . . . . . . . . . . . . . 140,000

Total stockholders equity . . . . . . . . . . . . . . . . . 170,000

Total liabilities and equity . . . . . . . . . . . . . . . . . $300,000

Castile Products, Inc.

Income Statement

For the Year Ended December 31

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $420,000

Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . 292,500

Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . 127,500

Selling and administrative expenses . . . . . . . . . 89,500

Net operating income . . . . . . . . . . . . . . . . . . . . . 38,000

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . 8,000

Net income before taxes . . . . . . . . . . . . . . . . . . 30,000

Income taxes (30%) . . . . . . . . . . . . . . . . . . . . . 9,000

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,000

Required:

Compute the following financial data and ratios:

1. Working capital.

2. Current ratio.

3. Acid-test ratio.

4. Debt-to-equity ratio.

5. Times interest earned ratio.

6. Average collection period.

7. Average sale period.

8. Operating cycle.