The financial statements for Castile Products, Incorporated are given below:

Castile Products, Incorporated

Balance Sheet

December $31$

Assets

Current assets:

Cash $ $20,000$

Accounts receivable, net $190,000$

Merchandise inventory $390,000$

Prepaid expenses $9,000$

Total current assets $609,000$

Property and equipment, net $820,000$

Total assets $ $1,429,000$

Liabilities and Stockholders' Equity

Liabilities:

Current liabilities $ $270,000$

Bonds payable, $10\%400,000$

Total liabilities $670,000$

Stockholders$$ equity:

Common stock, $$10$ per value $ $180,000$

Retained earnings $579,000$

Total stockholders$$ equity $759,000$

Total liabilities and stockholders$$ equity $ $1,429,000$

Castile Products, Incorporated

Income Statement For the Year Ended

December $31$

Sales $ $3,145,000$

Cost of goods sold $1,155,000$

Gross margin $1,990,000$

Selling and administrative expenses $610,000$

Net operating income $1,380,000$

Interest expense $40,000$

Net income before taxes $1,340,000$

Income taxes $(30\%)402,000$

Net income $ $938,000$

Account balances at the beginning of the year were: accounts receivable, $$180,000$; and inventory, $$270,000.$ 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. $($Use $365$ days in a year. Round your intermediate calculations and final answer to $1$ decimal place.$)$

Answer rating: 100% (QA)

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