Question

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 250,000 Merchandise inventory 330,000 Prepaid expenses 8,000 Total current assets 606,000 Property and equipment, net 880,000 Total assets $ 1,486,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 260,000 Bonds payable, 8% 340,000 Total liabilities 600,000 Stockholders’ equity: Common stock, $5 per value $ 140,000 Retained earnings 746,000 Total stockholders’ equity 886,000 Total liabilities and stockholders’ equity $ 1,486,000 Castile Products, Inc. Income Statement For the Year Ended December 31 Sales $ 3,760,000 Cost of goods sold 1,221,000 Gross margin 2,539,000 Selling and administrative expenses 620,000 Net operating income 1,919,000 Interest expense 27,200 Net income before taxes 1,891,800 Income taxes (30%) 567,540 Net income $ 1,324,260 Account balances at the beginning of the year were: accounts receivable, $220,000; and inventory, $330,000. All sales were on account. Required: Compute the following financial data and ratios: 1. Working capital. 2. Current ratio. (Round your answer to 1 decimal place.) 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 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. (Round your intermediate calculations and final answer to 1 decimal place.)

Answer 1