32.

value: 5.82 points

Exercise 13-6 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					190,000
Merchandise inventory					390,000
Prepaid expenses					8,000
Total current assets					609,000
Plant and equipment, net					820,000
Total assets				$	1,429,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities				$	270,000
Bonds payable, 11%					380,000
Total liabilities					650,000
Stockholders equity:
Common stock, $5 par value	$	130,000
Retained earnings		649,000
Total stockholders equity					779,000
Total liabilities and stockholders' equity				$	1,429,000

Madison Company Income Statement For the Year Ended June 30
Sales	$	2,380,000
Cost of goods sold		1,221,000
Gross margin		1,159,000
Selling and administrative expenses		620,000
Net operating income		539,000
Interest expense		41,800
Net income before taxes		497,200
Income taxes		149,160
Net income	$	348,040

Account balances at the beginning of the companys fiscal year were: accounts receivable, $150,000; and inventory, $270,000. All sales were on account.

Required:

Compute financial ratios as follows:

5.	Average sale period. (Use 365 days in a year. Do not round intermediate calculations. Round your final answer to 1 decimal place.)

Average sale period

days

6.	Debt-to-equity ratio. (Round your answer to 2 decimal places.)

Debt-to-equity ratio

7.	Times interest earned. (Round your answer to 1 decimal place.)

Times interest earned

8.	Book value per share. (Round your answer to the nearest dollar amount.)

Book value per share

$