The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31
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Question:
The financial statements for Castile Products, Inc., are given below:
Castile Products, Inc. | |
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Balance Sheet | |
December 31 | |
Assets | |
Current assets: | |
Cash | $21,000 |
Accounts receivable, net | 230,000 |
Merchandise inventory | 390,000 |
Prepaid expenses | 10,000 |
Total current assets | 651,000 |
Property and equipment, net | 900,000 |
Total assets | $1,551,000 |
Liabilities and Stockholders' Equity | |
Liabilities: | |
Current liabilities | $210,000 |
Bonds payable, 10% | 330,000 |
Total liabilities | 540,000 |
Stockholders' equity: | |
Common stock, $10 par value | 170,000 |
Retained earnings | 841,000 |
Total stockholders' equity | 1,011,000 |
Total liabilities and stockholders' equity | $1,551,000 |
Castile Products, Inc. | |
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Income Statement | |
For the Year Ended December 31 | |
Sales | $2,800,000 |
Cost of goods sold | 1,612,500 |
Gross margin | 1,187,500 |
Selling and administrative expenses | 640,000 |
Net operating income | 547,500 |
Interest expense | 33,000 |
Net income before taxes | 514,500 |
Income taxes (30%) | 154,350 |
Net income | $360,150 |
Account balances at the beginning of the year were: accounts receivable, $170,000 and inventory, $360,000. All sales were on account.
Required:
Compute the following financial ratios:
1. Working capital
2. Current ratio
3. Acid-test ratio
4. Debt-to-equity ratio
5. Times interest earned ratio
6. Average collection period. (Use 365 days in a year.)
7. Average sales period. (Use 365 days in a year.)
8. Operating cycle
Related Book For
Introduction to Managerial Accounting
ISBN: 978-0078025792
7th edition
Authors: Peter Brewer, Ray Garrison, Eric Noreen
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