Question
NUMBER THREE: The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 22,000
NUMBER THREE:
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
180,000
Merchandise inventory
380,000
Prepaid expenses
7,000
Total current assets
589,000
Property and equipment, net
820,000
Total assets
$
1,409,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities
$
220,000
Bonds payable, 10%
380,000
Total liabilities
600,000
Stockholders' equity:
Common stock, $5 par value
$
150,000
Retained earnings
659,000
Total stockholders' equity
809,000
Total liabilities and stockholders' equity
$
1,409,000
Castile Products, Inc.
Income Statement
For the Year Ended December 31
Sales
$
3,700,000
Cost of goods sold
1,276,500
Gross margin
2,423,500
Selling and administrative expenses
610,000
Net operating income
1,813,500
Interest expense
38,000
Net income before taxes
1,775,500
Income taxes (30%)
532,650
Net income
$
1,242,850
Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $310,000. All sales were on account.
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.
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