Question

Exercise 13-8 Selected Financial Ratios [LO13-2, LO13-3,LO13-4]

The financial statements for Castile Products, Inc., are givenbelow:

Castile Products, Inc. Balance Sheet December 31
Assets
Current assets:
Cash				$	20,000
Accounts receivable, net					190,000
Merchandise inventory					390,000
Prepaid expenses					7,000
Total currentassets					607,000
Property andequipment, net					810,000
Total assets				$	1,417,000
Liabilitiesand Stockholders' Equity
Liabilities:
Current liabilities				$	280,000
Bonds payable, 8%					380,000
Totalliabilities					660,000
Stockholders’equity:
Common stock, $5 par value				$	150,000
Retained earnings					607,000
Total stockholders’equity					757,000
Total liabilitiesand equity				$	1,417,000

Castile Products, Inc. Income Statement For the Year Ended December 31
Sales	$	2,520,000
Cost of goodssold		1,368,000
Gross margin		1,152,000
Selling andadministrative expenses		590,000
Net operatingincome		562,000
Interestexpense		30,400
Net income beforetaxes		531,600
Income taxes(30%)		159,480
Net income	$	372,120

Account balances at the beginningof the year were: accounts receivable, $170,000; and inventory,$330,000. All sales were on account.

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 decimalplace.)

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

8.	Operating cycle. (Round your intermediate calculationsand final answers to 1 decimal place.)