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				$	23,000
Accounts receivable, net					220,000
Merchandise inventory					390,000
Prepaid expenses					6,000
Total current assets					639,000
Property and equipment, net					870,000
Total assets				$	1,509,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities				$	230,000
Bonds payable, 11%					380,000
Total liabilities					610,000
Stockholders equity:
Common stock, $10 par value				$	120,000
Retained earnings					779,000
Total stockholders equity					899,000
Total liabilities and equity				$	1,509,000

Castile Products, Inc. Income Statement For the Year Ended December 31
Sales	$	2,870,000
Cost of goods sold		1,224,000
Gross margin		1,646,000
Selling and administrative expenses		590,000
Net operating income		1,056,000
Interest expense		41,800
Net income before taxes		1,014,200
Income taxes (30%)		304,260
Net income	$	709,940
Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $290,000. All sales were on account. Required: Compute the following financial data and ratios:

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

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

8.	Operating cycle. (Round your intermediate calculations and final answers to 1 decimal place.)