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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

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 $ 22,000
Accounts receivable, net 250,000
Merchandise inventory 400,000
Prepaid expenses 9,000
Total current assets 681,000
Property and equipment, net 860,000
Total assets $ 1,541,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities $ 230,000
Bonds payable, 11% 310,000
Total liabilities 540,000
Stockholders equity:
Common stock, $5 par value $ 150,000
Retained earnings 851,000
Total stockholders equity 1,001,000
Total liabilities and equity $ 1,541,000

Castile Products, Inc. Income Statement For the Year Ended December 31
Sales $ 2,940,000
Cost of goods sold 1,384,500
Gross margin 1,555,500
Selling and administrative expenses 600,000
Net operating income 955,500
Interest expense 34,100
Net income before taxes 921,400
Income taxes (30%) 276,420
Net income $ 644,980

Account balances at the beginning of the year were: accounts receivable, $170,000; and inventory, $310,000. 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.)

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