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, $52,900; total assets, $179,400; common stock, $86,000, and retained earnings, $35,486.) $ Assets Cash Short-term investments Accounts receivable, net Merchandise inventory CABOT CORPORATION Balance Sheet December 31 Liabilities and Equity $ 14,000 Accounts payable 8,800 Accrued wages payable 32,400 Income taxes payable 32,150 Long-term note payable, secured by mortgage on plant assets 2,550 Common stock 151,300 Retained earnings $ 241,200 Total liabilities and equity 17,500 3,000 3,300 67,400 Prepaid expenses Plant assets, net Total assets 86,000 64,000 $ 241,200 CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 449,600 Cost of goods sold 297,950 Gross profit 151,650 Operating expenses 99,500 Interest expense Income before taxes 47,750 Income tax expense 19,236 Net income $ 28,514 4,400 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 common stockholders' equity. (Do not round intermediate calculations.) 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 common stockholders' equity. (Do not round intermediate calculations.) Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Req 7 Req 8 Reg 9 Reg 10 Req 11 Compute the current ratio and acid-test ratio. (1) Current Ratio Choose Denominator: Choose Numerator: Current Ratio 1 Current ratio = to 1 (2) Acid-Test Ratio Choose Denominator: Choose Numerator: = / Acid-Test Ratio Acid-Test Ratio to 1 1 Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 4 Reg 5 Req 6 Reg 7 Reg 8 Reg 9 Reg 10 Req 11 Compute the days' sales uncollected. (3) Days' Sales Uncollected Choose Denominator: Days Choose Numerator: 1 = Days Sales Uncollected Days sales uncollected X = days Complete this question by entering your answers in the tabs below. Reg 1 and 2 Req3 Req 4 Req 5 Req 6 Req 7 Req8 Req9 Req 10 Req 11 Compute the inventory turnover. (4) Inventory Turnover I Choose Denominator: II Choose Numerator: = 11 Inventory Turnover Inventory turnover times 11 Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Req 4 Reg 5 Reg 6 Req 7 Reg 8 Reg 9 Reg 10 Req 11 Compute the days' sales in inventory. (5) Days' Sales in Inventory Choose Denominator: Choose Numerator: Days / Days' Sales in Inventory Days' sales in inventory days 1 Complete this question by entering your answers in the tabs below. Reg 1 and 2 Req3 Req 4 Req 5 Reg 6 Reg 7 Req 8 Reg 9 Req 10 Req 11 Compute the debt-to-equity ratio. (6) Choose Numerator: Debt-to-Equity Ratio I Choose Denominator: 1 = 11 Debt-to-Equity Ratio Debt-to-equity ratio to 1 Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Reg 4 Reg 5 Req 6 Reg 7 Reg 8 Req 9 Req 10 Req 11 Compute the times interest earned. (7) Times Interest Earned Choose Numerator: 1 Choose Denominator: = Times Interest Earned 1 = Times interest earned times Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Req 7 Reg 8 Reg 9 Reg 10 Req 11 Compute the profit margin ratio. (8) Profit Margin Ratio Choose Denominator: Choose Numerator: 1 Profit margin ratio Profit margin ratio 1 = Req 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Req 7 Reg 8 Reg 9 Reg 10 Req 11 Compute the total asset turnover. (9) Total Asset Turnover Choose Denominator: Choose Numerator: 1 Total Asset Turnover Total asset turnover times 1 Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Req 4 Req 5 Req 6 Req 7 Req 8 Reg 9 Req 10 Req 11 Compute the return on total assets. (10) Choose Numerator: = Return on Total Assets | Choose Denominator: 1 1 Return on Total Assets Return on total assets = % Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Req 7 Req 8 Reg 9 Req 10 Reg 11 Compute the return on common stockholders' equity. (11) Return on Common Stockholders' Equity 1 Choose Denominator Choose Numerator: = Return On Common Stockholders' Equity Return on common stockholders' equity 1 = %