Problem 13-4A 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, $55,900; total assets, $219,400; common stock, $84,000; and retained earnings, $37,945.) CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 448,600 Cost of goods sold 297,350 Gross profit 151,250 Operating expenses 99,500 Interest expense 4,100 Income before taxes 47,650 Income tax expense 19, 195 Net income $ 28,455 Assets Cash Short-term investments Accounts receivable, net Merchandise inventory CABOT CORPORATION Balance Sheet December 31 Liabilities and Equity $ 18,000 Accounts payable 8,200 Accrued wages payable 29,000 Income taxes payable 36,150 Long-term note payable, secured by mortgage on plant assets 2,950 Common stock 154,300 Retained earnings $ 248,600 Total liabilities and equity $ 19,500 4,000 4,300 70,400 Prepaid expenses Plant assets, net Total assets 84,000 66,400 $ 248,600 Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Req 4 Req 5 Reg 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the current ratio and acid-test ratio. (1) Current Ratio Choose Numerator: Choose Denominator: Current Ratio / Current ratio / to 1 (2) Acid-Test Ratio Choose Denominator: Choose Numerator: 1 Acid-Test Ratio Acid-Test Ratio / = 1 to 1 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. Reg 1 and 2 Req3 Req 4 Req 5 Reg 6 Req 7 Reg 8 Reg 9 Req 10 Req 11 Compute the total asset turnover. (9) Total Asset Turnover Choose Denominator: Choose Numerator: 1 = Total Asset Turnover 1 = Total asset turnover / times 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. Reg 1 and 2 Req3 Reg 4 Req 5 Reg 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the return on total assets. (10) Return on Total Assets Choose Denominator: Choose Numerator: 1 Return on Total Assets / Return on total assets 1 % Reg 9 Req 11 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. Reg 1 and 2 Req3 Reg 4 Reg 5 Req 6 Req 7 Req 8 Req 9 Reg 10 Req 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 Req 10 Reg 11
