Please include all the steps, thanks~ The financial statements for Castile Produ
ID: 2471572 • Letter: P
Question
Please include all the steps, thanks~
The financial statements for Castile Products, Inc., are given below Castile Products, Inc Balance Sheet Assets Current assets 5 24,000 230,000 390,000 10,000 Cash Accounts receivable, net Prepaid expenses 854,000 820,000 Total current assets Property and equipment, net Total assets Liabilities and Stockholders' Equity 51,474,000 Current liabilities Bonds payable, 9% S 220,000 400,000 Total liabilities Stockholders' equity: Common stock, $5 par value Retained S 130,000 724,000 854,000 51,474,000 earnings Total stockholders' equity Total liabilities and equity Castile Products, Inc. Income Statement For the Year Ended December 31 Sales Cost of goods sold 53,080,000 1,314,00 Gross margin Selling and administrative expenses 1,766,000 570,000 Net operating income Interest 1,198,00 38,000 Net income before taxes Income taxes (30%) 1,160,000 348,000 Net income 5 812,000 Account balances at the beginning of the year were: accounts receivable, $210,000; and inventory 5340,000. All sales were on account Required: Compute the following financial data and ratios:Explanation / Answer
1)
Working Capital=Current Assets-Current Liablities
=$654000-$220000
=$434000
2)Current Ratio =Current Assets/Current Liabilties
=654000/220000
=2.97
3)Acid test ratio=Liquid Assets/Current Liabilties
=(Currents Assets-Inventory-Prepaid exp.)/Current Liabilties
=(654000-390000-10000)/220000
=1.20
4)Debt to equity ratio=Total Debt/Total Equity
=400000/854000
=0.47
5)Times interest earned ratio=Earnings before interest and taxes / Interest expense
=1196000/36000
=33.22 times
6)Average Collecation period=No of working days*Average Accounts receivable /Credit sales
Average Accounts receivable =(Opening Accounts receivable+Closing Accounts receivable)/2
=(210000+230000)/2
=$220000
Average Collection period=(365*220000)/3080000
=26.07 days
7)Average sale period= 365*Average inventory/Cost of goods sold
Average inventory =Opening Inventory+Closing Inventory/2
=340000+390000/2
=$365000
Average sale period=365*365000/1314000
=101.39
8)Operating Cycle=365*Average inventory/Cost of goods sold+365*Average Accounts receivable/Sales
Operating Cycle=(365*365000)/1314000+(365*220000)/3080000
=101.39+26.07
=127.46