Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 13-4A Calculation of financial statement ratios LO P3 Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet

Problem 13-4A Calculation of financial statement ratios LO P3 Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2016, were inventory, $48,900; total assets, $239,400; common stock, $81,000; and retained earnings, $31,675.) CABOT CORPORATION Income Statement For Year Ended December 31, 2017 Sales $ 451,600 Cost of goods sold 297,350 Gross profit 154,250 Operating expenses 98,900 Interest expense 4,400 Income before taxes 50,950 Income taxes 20,525 Net income $ 30,425 CABOT CORPORATION Balance Sheet December 31, 2017 Assets Liabilities and Equity Cash $ 16,000 Accounts payable $ 16,500 Short-term investments 8,800 Accrued wages payable 4,800 Accounts receivable, net 29,600 Income taxes payable 4,400 Notes receivable (trade)* 3,500 Merchandise inventory 32,150 Long-term note payable, secured by mortgage on plant assets 72,400 Prepaid expenses 2,850 Common stock 81,000 Plant assets, net 148,300 Retained earnings 62,100 Total assets $ 241,200 Total liabilities and equity $ 241,200 * These are short-term notes receivable arising from customer (trade) sales. 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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

Draft a proposal for a risk assessment exercise.

Answered: 1 week ago