Selected Financial Ratios [LO3, LO4]

Recent financial statements for Madison Company follow:

Madison Company Balance Sheet June 30 Assets Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,000 Accounts receivable, net . . . . . . . . . . . . . . . 160,000 Merchandise inventory . . . . . . . . . . . . . . . . 300,000 Prepaid expenses . . . . . . . . . . . . . . . . . . . . 9,000 Total current assets . . . . . . . . . . . . . . . . . . . . 490,000 Plant and equipment, net . . . . . . . . . . . . . . . . 810,000 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . $1,300,000 Liabilities and Stockholders’ Equity Liabilities:
Current liabilities . . . . . . . . . . . . . . . . . . . . . $ 200,000 Bonds payable, 10% . . . . . . . . . . . . . . . . . . 300,000 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 Stockholders’ equity:
Common stock, $5 par value . . . . . . . . . . . $100,000 Retained earnings . . . . . . . . . . . . . . . . . . . 700,000 Total stockholders’ equity . . . . . . . . . . . . . . . . 800,000 Total liabilities and stockholders’ equity . . . . . $1,300,000 Madison Company Income Statement For the Year Ended June 30 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,100,000 Cost of goods sold . . . . . . . . . . . . . . . . . . . . 1,260,000 Gross margin . . . . . . . . . . . . . . . . . . . . . . . . 840,000 Selling and administrative expenses . . . . . . 660,000 Net operating income . . . . . . . . . . . . . . . . . . 180,000 Interest expense . . . . . . . . . . . . . . . . . . . . . . 30,000 Net income before taxes . . . . . . . . . . . . . . . 150,000 Income taxes . . . . . . . . . . . . . . . . . . . . . . . . 45,000 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 105,000 Account balances at the beginning of the company’s fiscal year were: accounts receivable, $140,000; and inventory, $260,000. All sales were on account.
Required:
Compute financial ratios as follows:
1. Gross m argin pe rcentage.
2. Current r atio.
3. Acid-test r atio.
4. Average c ollection pe riod.
5. Average s ale pe riod.
6. Debt-to-equity r atio.
7. Times i nterest e arned.
8. Book v alue pe r s hare.