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

Question

The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet Assets Current assets: 5 21,000 230,000 390,000 10,000 Prepaid expenses Total current assets Property and equipment, net 851,000 900,000 Total assets $1,551,000 Liabilities and Stockholders' Equity Current liabilities Bonds payable, 1096 S 210,000 330,000 540,000 S 170,000 Total liabilities Stockholders equity: Common stock, $10 par value Retained earnings 841,000 1,011,000 $1,551,000 Total stockholders' equity Total liabilities and equity Castile Products, Inc. Income Statement For the Year Ended December 31 Sales Cost of goods sold $2,800,000 1,612,500 Gross margin Selling and administrative expenses 1,187,500 840,000 Net operating income Interest expense 547,500 33,000 Net income before taxes Income taxes (30%) 514,500 154,350 Net income S 380,150

Explanation / Answer

1 working capital= Current Assets- Current Liabilities working capital= 651000-210000 working capital= 441000 2 Current Ratio= Current Assets/ Current Liabilities Current Ratio= 651000/210000 Current Ratio= 3.10 3 Acid Test Ratio= (Total Current Assets- Inventory- Prepaid Expenses)/Current Liabilities Acid Test Ratio= (651000-390000-10000)/210000 Acid Test Ratio= 1.20 4 Debt to Equity Ratio= Total Liabilities/ Total Equity 540000/1011000 0.53 5 Times Interest earned ratio= Income before interest and taxes/ interest expenses Times Interest earned ratio= 547500/33000 Times Interest earned ratio= 16.59 6 Average Collection period= 365*(average accounts receivable/sales revenue) Average Collection period= 365*(230000/2800000) Average Collection period= 29.98 Average Collection period= 30.0 7 Average sales period= 365*(average inventory/cost of goods sold) Average sales period= 365*(390000/1612500) Average sales period= 88.28 Average sales period= 88.3 8 Operating cycle= Operating cycle = DIO + DSO – DPO Where DIO represents days inventory outstanding= (Average inventories / cost of sales) * 365 88.28 DSO represents day sales outstanding= (Average accounts receivables / net sales) * 365 29.98 DPO represents days payable outstanding= (Average accounts payable / cost sales) * 365 47.53 Operating cycle = DIO + DSO – DPO 88.28+29.98-47.53 70.7

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.