Exercise 15-8 Selected Financial Ratios

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

Castile Products, Inc. Balance Sheet December 31
Assets
Current assets:
Cash				$	6,500
Accounts receivable, net					35,000
Merchandise inventory					70,000
Prepaid expenses					3,500
Total current assets					115,000
Property and equipment, net					185,000
Total assets				$	300,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities				$	50,000
Bonds payable, 10%					80,000
Total liabilities					130,000
Stockholders equity:
Common stock, $5 par value				$	30,000
Retained earnings					140,000
Total stockholders equity					170,000
Total liabilities and equity				$	300,000

Castile Products, Inc. Income Statement For the Year Ended December 31
Sales	$	420,000
Cost of goods sold		292,500
Gross margin		127,500
Selling and administrative expenses		89,500
Net operating income		38,000
Interest expense		8,000
Net income before taxes		30,000
Income taxes (30%)		9,000
Net income	$	21,000

Account balances at the beginning of the year were: accounts receivable, $25,000; and inventory, $60,000. All sales were on account.

Required:

Compute the following financial data and ratios:

1. Working capital 2. Current ratio (Round your answer to 1 decimal place.) 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 answer to 1 decimal place.)