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				$	18,000
Accounts receivable, net					220,000
Merchandise inventory					360,000
Prepaid expenses					8,000
Total current assets					606,000
Property and equipment, net					830,000
Total assets				$	1,436,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities				$	290,000
Bonds payable, 8%					330,000
Total liabilities					620,000
Stockholders equity:
Common stock, $10 par value				$	140,000
Retained earnings					676,000
Total stockholders equity					816,000
Total liabilities and equity				$	1,436,000

Castile Products, Inc. Income Statement For the Year Ended December 31
Sales	$	2,520,000
Cost of goods sold		1,455,500
Gross margin		1,064,500
Selling and administrative expenses		610,000
Net operating income		454,500
Interest expense		26,400
Net income before taxes		428,100
Income taxes (30%)		128,430
Net income	$	299,670

Account balances at the beginning of the year were: accounts receivable, $140,000; and inventory, $350,000. 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.)