Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Exercise 13-8 Selected Financial Ratios [LO13-2, LO13-3, LO13-4] The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31
Exercise 13-8 Selected Financial Ratios [LO13-2, LO13-3, LO13-4]
The financial statements for Castile Products, Inc., are given below: |
Castile Products, Inc. Balance Sheet December 31 | ||||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 18,000 | ||||
Accounts receivable, net | 220,000 | |||||
Merchandise inventory | 360,000 | |||||
Prepaid expenses | 8,000 | |||||
Total current assets | 606,000 | |||||
Property and equipment, net | 830,000 | |||||
Total assets | $ | 1,436,000 | ||||
Liabilities and Stockholders' Equity | ||||||
Liabilities: | ||||||
Current liabilities | $ | 290,000 | ||||
Bonds payable, 8% | 330,000 | |||||
Total liabilities | 620,000 | |||||
Stockholders equity: | ||||||
Common stock, $10 par value | $ | 140,000 | ||||
Retained earnings | 676,000 | |||||
Total stockholders equity | 816,000 | |||||
Total liabilities and equity | $ | 1,436,000 | ||||
Castile Products, Inc. Income Statement For the Year Ended December 31 | |||
Sales | $ | 2,520,000 | |
Cost of goods sold | 1,455,500 | ||
Gross margin | 1,064,500 | ||
Selling and administrative expenses | 610,000 | ||
Net operating income | 454,500 | ||
Interest expense | 26,400 | ||
Net income before taxes | 428,100 | ||
Income taxes (30%) | 128,430 | ||
Net income | $ | 299,670 | |
Account balances at the beginning of the year were: accounts receivable, $140,000; and inventory, $350,000. All sales were on account. |
Required: |
Compute the following financial data and ratios: |
1. | Working capital. |
2. | Current ratio. (Round your answer to 2 decimal places.) |
3. | Acid-test ratio. (Round your answer to 2 decimal places.) |
4. | Debt-to-equity ratio. (Round your answer to 2 decimal places.) |
5. | Times interest earned ratio. (Round your answer to 2 decimal places.) |
6. | Average collection period. (Use 365 days in a year. Round your answer to 1 decimal place.) |
7. | Average sale period. (Use 365 days in a year. Round your intermediate and final answer to 1 decimal place.) |
8. | Operating cycle. (Round your intermediate calculations and final answers to 1 decimal place.) |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started