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:

1.	Working capital.

2.	Current ratio. (Round your answer to 2 decimal places.)

3.	Acid-test ratio. (Round your answer to 2 decimal places.)

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

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 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.)