13-4A (Algo) Calculating financial statement ratios LO P3 Selected current year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31 of the prior year were inventory, $49,900; total assets, $219,400; common stock, $85,000; and retained earnings, $28,701.) CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity Assets Cashi Short-term investments Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net $ 10,000 Accounts payable 9,000 Accrued wages payable 32,800 Income taxes payable 38,150 3,000 148,300 Long-term note payable, secured by mortgage on plant assets Common stock Retained earnings Total assets $ 241,250 Total liabilities and equity CABOT CORPORATION Income Statement $ 18,500 3,600 4,400 71,400 85,000 58,350 $ 241,250 For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes Income tax expense Net income Required: $ 451,600 298,150 153,450 99,100 4,700 49,650 20,001 $ 29,649 Compute the following: (1) current ratio, (2) acid-test ratio, (3) days' sales uncollected, (4) inventory turnover, (5) days' sales in inventory, (6) debt-to-equity ratio, (7) times interest earned, (8) profit margin ratio, (9) total asset turnover, (10) return on total assets, and (11) return on equity. (Do not round intermediate calculations.) Complete this question hy entering your answers in the tahs helow < Prev 1 of 1 Next Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the current ratio and acid-test ratio. (1) Current Ratio Numerator: I Denominator: = Current Ratio = Current ratio = to 1 (2) Acid-Test Ratio Numerator: Denominator: = Acid-Test Ratio = Acid-Test Ratio to 1 Req 1 and 2 Req 3 > Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the days' sales uncollected. (3) Days' Sales Uncollected Numerator: 1 Denominator: x Days Days Sales Uncollected < Req 1 and 2 Req 4 > Days sales uncollected days Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the inventory turnover. (4) Numerator: 1 Inventory Turnover Denominator: Inventory Turnover Inventory turnover times < Req 3 Req 5 > Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the days' sales in inventory. (5) Numerator: Days' Sales in Inventory. Denominator: Days = Days' Sales in Inventory x = x = Days' sales in inventory days < Req 4 Req 6 > Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the debt-to-equity ratio. (6) Numerator: Debt-to-Equity Ratio Denominator: = Debt-to-Equity Ratio = Debt-to-equity ratio = to 1 < Req 5 Req 7 > Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the times interest earned. (7) Numerator: + + Times Interest Earned Denominator: = Times Interest Earned = Times interest earned = times < Req 6 Req 8 > Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Req 8 Compute the profit margin ratio. (8) Numerator: 1 Profit Margin Ratio Denominator: = Profit margin ratio = Profit margin ratio = % < Req 7 Req 9 > Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the total asset turnover. (9) Numerator: 1 I Total Asset Turnover Denominator: = Total Asset Turnover = Total asset turnover times < Req 8 Req 10 > Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the return on total assets. (10) Return on Total Assets Numerator: Denominator: = Return on Total Assets Return on total assets % < Req 9 Req 11 > Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the return on equity. (11) Numerator: Return on Equity Denominator Return On Equity Return on equity % < Req 10 Req 11 >