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, $56,900; total assets, $199,400; common stock, $81,000; and retained earnings, $41,541.)

CABOT CORPORATION

Income Statement

For Year Ended December 31, 2017Sales$449,600Cost of goods sold296,950Gross profit152,650Operating expenses98,900Interest expense4,000Income before taxes49,750Income taxes20,041Net income$29,709

CABOT CORPORATION

Balance Sheet

December 31, 2017AssetsLiabilities and EquityCash$14,000Accounts payable$15,500Short-term investments8,600Accrued wages payable4,200Accounts receivable, net31,800Income taxes payable4,600Notes receivable (trade)*4,500Merchandise inventory34,150Long-term note payable, secured by mortgage on plant assets68,400Prepaid expenses2,600Common stock81,000Plant assets, net149,300Retained earnings71,250Total assets$244,950Total liabilities and equity$244,950

* 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.