Exercise 16-8 (Algo) Selected Financial Ratios [LO16-2, LO16-3, LO16-4]

The financial statements for Castile Products, Incorporated, are given below:

Castile Products, Incorporated Balance Sheet December 31
Assets
Current assets:
Cash	$ 24,000
Accounts receivable, net	240,000
Merchandise inventory	310,000
Prepaid expenses	9,000
Total current assets	583,000
Property and equipment, net	900,000
Total assets	$ 1,483,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities	$ 280,000
Bonds payable, 9%	380,000
Total liabilities	660,000
Stockholders equity:
Common stock, $10 par value	$ 150,000
Retained earnings	673,000
Total stockholders equity	823,000
Total liabilities and stockholders equity	$ 1,483,000

Castile Products, Incorporated Income Statement For the Year Ended December 31
Sales	$ 3,290,000
Cost of goods sold	1,197,000
Gross margin	2,093,000
Selling and administrative expenses	640,000
Net operating income	1,453,000
Interest expense	34,200
Net income before taxes	1,418,800
Income taxes (30%)	425,640
Net income	$ 993,160

Account balances at the beginning of the year were: accounts receivable, $230,000; and inventory, $320,000. All sales were on account.

4. Debt-to-equity ratio. (Round your answer to 2 decimal places.)

6. Average collection period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.)

7. Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.)

8. Operating cycle. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.)