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				$	20,000
Accounts receivable, net					210,000
Merchandise inventory					360,000
Prepaid expenses					8,000
Total current assets					598,000
Property and equipment, net					840,000
Total assets				$	1,438,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities				$	200,000
Bonds payable, 10%					310,000
Total liabilities					510,000
Stockholders equity:
Common stock, $5 par value				$	120,000
Retained earnings					808,000
Total stockholders equity					928,000
Total liabilities and equity				$	1,438,000

Castile Products, Inc. Income Statement For the Year Ended December 31
Sales	$	2,590,000
Cost of goods sold		1,575,000
Gross margin		1,015,000
Selling and administrative expenses		600,000
Net operating income		415,000
Interest expense		31,000
Net income before taxes		384,000
Income taxes (30%)		115,200
Net income	$	268,800

Account balances at the beginning of the year were: accounts receivable, $160,000; and inventory, $340,000. All sales were on account.

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.)