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 December 31 Assets Current assets: $ 21,000 200,000 390,000 10,000 621,000 830,000 $1,451,000 Cash Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets Property and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 250,000 390,000 640,000 Bonds payable, 12% Total liabilities Stockholders' eguity: $120,000 691,000 811,000 Total liabilities and stockholders' equity$1,451,000 Common stock, $5 par value Retained earnings Total stockholders' equity

Explanation / Answer

Solution: (a)Working Capital Current Assets- Current Liabilities 621000-640000 -19000 (b) Current Ratio Current assets/Current Liabilities 621000/640000                                                                                        0.97 © Acid Test Ratio Current assts- Inventory/Current Liability (621000-390000)/640000                                                                                        0.36 (d) Debt To Equity ratio= Debt/Equity 390000/811000                                                                                        0.48 € Time Interest Earned ratio Earning Before Interst and Tax/Interst Income EBIT=1880500 Interest Expense=46800 Time Interest Earned ratio 1880500/46800                                                                                      40.18 (f) Average Collection Period Number of days in year/Debtor turnover ratio Debtor Turnover ratio Turnover/Average Receivable 4100000/275000                                                                                      14.91 Times Average Collecion Period 365/14.91                                                                                        24.5 Days (g) Average Sale Period Turnover/365 4100000/365                                                                              11,232.88 Per day (h) Operating Cycle 365 * Average Inventories + 365 * Average Receivble Purchases Credit sale COGS Opening Inventoey+Purchase- Closing Inventory 1569500 340000+Purchase-390000 1569500 Purchase-50000 Purchase    1,619,500.00 operating cycle 365 *    365,000.00 + 365 *    205,000.00 1619500 4100000 82.26 + 18.25 100.5 Days Financial Ratios (a) Earning Per share Net Profit/ Weighted Number of Equity shares 1283590/24000                                                                                      53.48 (b) Dividend Payout ratio Dividends/ Net income Dividend paid 3.55*24000 85200 Dividend payout ratio                                                                                        0.06 © Dividend yeild Ratio Dividend per share/Current share price 3.55/58                                                                                        0.06 (d)Price earning ratio Market value/EPS 58/53.48                                                                                        1.08 € Book Value per share 5

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