Question

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

Castile Products, Inc. Balance Sheet December 31
Assets
Current assets:
Cash	$	20,000
Accounts receivable, net		210,000
Merchandise inventory		320,000
Prepaid expenses		9,000
Total current assets		559,000
Property and equipment, net		840,000
Total assets	$	1,399,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities	$	280,000
Bonds payable, 11%		310,000
Total liabilities		590,000
Stockholders’ equity:
Common stock, $10 per value	$	110,000
Retained earnings		699,000
Total stockholders’ equity		809,000
Total liabilities and stockholders’ equity	$	1,399,000

Castile Products, Inc. Income Statement For the Year Ended December 31
Sales	$	2,850,000
Cost of goods sold		1,098,000
Gross margin		1,752,000
Selling and administrative expenses		630,000
Net operating income		1,122,000
Interest expense		34,100
Net income before taxes		1,087,900
Income taxes (30%)		326,370
Net income	$	761,530

Account balances at the beginning of the year were: accounts receivable, $170,000; and inventory, $290,000. 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