The financial statements for Castile Products, Inc., are given below: Account ba

Question

The financial statements for Castile Products, Inc., are given below:

Account balances at the beginning of the year were: accounts receivable, $240,000; and inventory, $300,000. 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.)

Castile Products, Inc.
Balance Sheet
December 31 Assets Current assets: Cash $ 20,000 Accounts receivable, net 200,000 Merchandise inventory 380,000 Prepaid expenses 8,000 Total current assets 608,000 Property and equipment, net 810,000 Total assets $ 1,418,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 200,000 Bonds payable, 10% 300,000 Total liabilities 500,000 Stockholders’ equity: Common stock, $5 par value $ 180,000 Retained earnings 738,000 Total stockholders’ equity 918,000 Total liabilities and stockholders’ equity $ 1,418,000 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 days days days

Explanation / Answer

There are multiple questions posted and we are supposed to solve 4 parts only
1)Working capital= Current Assets-Current liabilites
=608000-200000=408000
2)Currrent Ratio=Current Assets/Current liabilites
=608000/200000=3
3)Acid test Ratio=(Current assets-inventory)/current liabilites
=(608000-380000)/200000=1.14
4)Debt toequity ratio=Total liabilites/total equity
=500000/918000=0.54

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