Question
Exercise 16-8 (Algo) Selected Financial Ratios [LO16-2, LO16-3, LO16-4] The financial statements for Castile Products, Incorporated, are given below: Castile Products, Incorporated Balance Sheet December
Exercise 16-8 (Algo) Selected Financial Ratios [LO16-2, LO16-3, LO16-4]
The financial statements for Castile Products, Incorporated, are given below:
Castile Products, Incorporated Balance Sheet December 31 | |
Assets | |
---|---|
Current assets: | |
Cash | $ 24,000 |
Accounts receivable, net | 240,000 |
Merchandise inventory | 310,000 |
Prepaid expenses | 9,000 |
Total current assets | 583,000 |
Property and equipment, net | 900,000 |
Total assets | $ 1,483,000 |
Liabilities and Stockholders' Equity | |
Liabilities: | |
Current liabilities | $ 280,000 |
Bonds payable, 9% | 380,000 |
Total liabilities | 660,000 |
Stockholders equity: | |
Common stock, $10 par value | $ 150,000 |
Retained earnings | 673,000 |
Total stockholders equity | 823,000 |
Total liabilities and stockholders equity | $ 1,483,000 |
Castile Products, Incorporated Income Statement For the Year Ended December 31 | |
Sales | $ 3,290,000 |
---|---|
Cost of goods sold | 1,197,000 |
Gross margin | 2,093,000 |
Selling and administrative expenses | 640,000 |
Net operating income | 1,453,000 |
Interest expense | 34,200 |
Net income before taxes | 1,418,800 |
Income taxes (30%) | 425,640 |
Net income | $ 993,160 |
Account balances at the beginning of the year were: accounts receivable, $230,000; and inventory, $320,000. All sales were on account.
4. Debt-to-equity ratio. (Round your answer to 2 decimal places.)
6. Average collection period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.)
7. Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.)
8. Operating cycle. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started