Problem 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, $47,900; total assets, $239,400; common stock, $81,000; and retained earnings. $41,600.) Assets Cash Short-term investments Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity $ 16,000 Accounts payable $ 16,500 9,200 Accrued wages payable 3,200 28,800 Income taxes payable 2,900 32,150 2,500 153,300 Long-term note payable, secured by mortgage on plant assets 67,400 Common stock 81,000 Retained earnings 70,950 $ 241,950 Total liabilities and equity $241,950 CABOT CORPORATION For Current Year Ended December 31 Income Statement Sales $ 450,600 Cost of goods sold 298,350 Gross profit 152,250 Operating expenses 98,900 Interest expense 4,200 Income before taxes 49.150 Income tax expense 19,800 $29,350 Net incone. Required: 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.) Req 1 and 2 Req 31 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: 1 Denominator: Current Ratio 1 Current ratio to 1 (2) Numerator: Acid-Test Ratio Denominator: Acid-Test Ratio Acid-Test Ratio to 1 Req 1 and 2 Req 3 > 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 uncollected. (3) Days' Sales Uncollected Numerator: Denominator: M Days Days Sales Uncollected Days sales uncollected days 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 inventory turnover. (4) Numerator: Inventory Turnover Denominator: Inventory Turnover Inventory turnover times 1 < Req 3 Req 5 > Required: 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 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: K Days Days' Sales in Inventory x x Days' sales in inventory days 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 BER Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Req 51 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the times interest earned. (7) Numerator: Times Interest Earned 1 Denominator: < Req 6 Req 8 > Times Interest Earned Times interest earned. = times Mayt Complete this question by Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Red 3 Req 9 Req 10 Compute the profit margin ratio. (8) Numerator: 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 Compute the total asset turnover. (9) Numerator: Total Asset Turnover Denominator: == Total Asset Turnover = Total asset turnover = times < Req 8 Req 10 > 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 return on total assets. (10) Numerator: 1 Return on Total Assets Denominator: Return on Total Assets = Return on total assets = % < Req 9 Req 11 > on equity. (Do not round intermediate calculations.) 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 return on equity. (11) Numerator: Return on Equity Denominator < Req 10 = Req 11 > Return On Equity Return on equity %