Exercise 15-8 Selected Financial Ratios [LO15-2, LO15-3, LO15-4]

The financial statements for Castile Products, Inc., are given below:

Castile Products, Inc. Balance Sheet December 31
Assets
Current assets:
Cash				$	24,000
Accounts receivable, net					200,000
Merchandise inventory					370,000
Prepaid expenses					11,000
Total current assets					605,000
Property and equipment, net					870,000
Total assets				$	1,475,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities				$	250,000
Bonds payable, 9%					310,000
Total liabilities					560,000
Stockholders equity:
Common stock, $10 par value				$	150,000
Retained earnings					765,000
Total stockholders equity					915,000
Total liabilities and equity				$	1,475,000

Castile Products, Inc. Income Statement For the Year Ended December 31
Sales	$	2,800,000
Cost of goods sold		1,313,500
Gross margin		1,486,500
Selling and administrative expenses		640,000
Net operating income		846,500
Interest expense		27,900
Net income before taxes		818,600
Income taxes (30%)		245,580
Net income	$	573,020

Account balances at the beginning of the year were: accounts receivable, $200,000; and inventory, $340,000. 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 answer to 1 decimal place.)