EXERCISE 16-8 Selected Financial Ratios LO16-2, LO16-3, LO16-4 The financial statements for Castile Products, Inc., are given below. Castile Products, Inc. Assets Current assets: Balance Sheet December 31 Cash Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets Property and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities.. Bonds payable, 10% Total liabilities.. Stockholders' equity Common stock, $5 per value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 6,500 35,000 70,000 3,500 115,000 185,000 $300,000 $ 50,000 80,000 130,000 30,000 140,000 170,000 $300,000 Castle 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. 3. Acid-test ratio. 4. Debt-to-equity ratio. 5. Times interest earned ratio. 6. Average collection period. 7. Average sale period. 8. Operating cycle.