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1 Mar 2019

Exercise 13-8 Selected Financial Ratios [LO13-2, LO13-3,LO13-4]

The financial statements for Castile Products, Inc., are givenbelow:

Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash $ 20,000
Accounts receivable, net 190,000
Merchandise inventory 390,000
Prepaid expenses 7,000
Total currentassets 607,000
Property andequipment, net 810,000
Total assets $ 1,417,000
Liabilitiesand Stockholders' Equity
Liabilities:
Current liabilities $ 280,000
Bonds payable, 8% 380,000
Totalliabilities 660,000
Stockholders’equity:
Common stock, $5 par value $ 150,000
Retained earnings 607,000
Total stockholders’equity 757,000
Total liabilitiesand equity $ 1,417,000
Castile Products, Inc.
Income Statement
For the Year Ended December 31
Sales $ 2,520,000
Cost of goodssold 1,368,000
Gross margin 1,152,000
Selling andadministrative expenses 590,000
Net operatingincome 562,000
Interestexpense 30,400
Net income beforetaxes 531,600
Income taxes(30%) 159,480
Net income $ 372,120

Account balances at the beginningof the year were: accounts receivable, $170,000; and inventory,$330,000. All sales were on account.

5. Times interest earned ratio.(Round your answer to 2 decimal places.)


6. Average collection period.(Use 365 days in a year. Round your answer to 1 decimalplace.)


7. Average sale period.(Use 365 days in a year. Round your intermediate and finalanswer to 1 decimal place.)


8.

Operating cycle. (Round your intermediate calculationsand final answers to 1 decimal place.)


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Jamar Ferry
Jamar FerryLv2
4 Mar 2019

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