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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 | $ | 22,000 | ||||
Accounts receivable, net | 250,000 | |||||
Merchandise inventory | 400,000 | |||||
Prepaid expenses | 9,000 | |||||
Total current assets | 681,000 | |||||
Property and equipment, net | 860,000 | |||||
Total assets | $ | 1,541,000 | ||||
Liabilities and Stockholders' Equity | ||||||
Liabilities: | ||||||
Current liabilities | $ | 230,000 | ||||
Bonds payable, 11% | 310,000 | |||||
Total liabilities | 540,000 | |||||
Stockholders equity: | ||||||
Common stock, $5 par value | $ | 150,000 | ||||
Retained earnings | 851,000 | |||||
Total stockholders equity | 1,001,000 | |||||
Total liabilities and equity | $ | 1,541,000 | ||||
Castile Products, Inc. Income Statement For the Year Ended December 31 | |||
Sales | $ | 2,940,000 | |
Cost of goods sold | 1,384,500 | ||
Gross margin | 1,555,500 | ||
Selling and administrative expenses | 600,000 | ||
Net operating income | 955,500 | ||
Interest expense | 34,100 | ||
Net income before taxes | 921,400 | ||
Income taxes (30%) | 276,420 | ||
Net income | $ | 644,980 | |
Account balances at the beginning of the year were: accounts receivable, $170,000; and inventory, $310,000. 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.) |
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