Exercise 13-8 Selected Financial Ratios [LO13-2, LO13-3, LO13-4 The financial st

Question

Exercise 13-8 Selected Financial Ratios [LO13-2, LO13-3, LO13-4 The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash Accounts receivable, net Merchandise inventory $ 20,000 210,000 390,000 8,000 Prepaid expenses Total current assets Property and equipment, net 628,000 870,000 Total assets $1,498,000 Liabilities and Stockholders' Equity Liabilities $ 250,000 Current liabilities Bonds payable, 8% 330,000 580,000 $ 160,000 Total liabilities Stockholders' equity Common stock, $10 par value Retained earnings 758,000 918,000 $1,498,000 Total stockholders' equity Total liabilities and equity

Explanation / Answer

1 Working Capital Current Assets - Current Liabilities 628000 - 250000                        378,000 2 Current Ratio Current Assets / Current Liabilities 628000 / 250000 2.512 3 Acid Test Ratio Total Current Assets - Inventory - Prepaid Expenses / Current Liabilities 628000 - 390000 - 8000 / 250000 0.92 4 Debt to assets ratio Total Debt / Total Assets 580000 / 1498000                               0.39 5 Times Interest Earned ratio Income before interest and inc tax / Interest expense 550000 / 26400                             20.83 As per Chegg Guidelines we need to answer first 4 questions only

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