Question
Problem 17-4A (Algo) Calculating financial statement ratios LO P3 Selected current year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance
Problem 17-4A (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, $46,900; total assets, $229,400; common stock, $86,000; and retained earnings, $49,827.)
CABOT CORPORATION | |||
Balance Sheet | |||
December 31 of current year | |||
Assets | Liabilities and Equity | ||
Cash | $ 14,000 | Accounts payable | $ 16,500 |
Short-term investments | 9,400 | Accrued wages payable | 4,400 |
Accounts receivable, net | 31,800 | Income taxes payable | 3,200 |
Merchandise inventory | 42,150 | Long-term note payable, secured by mortgage on plant assets | 64,400 |
Prepaid expenses | 2,550 | Common stock | 86,000 |
Plant assets, net | 153,300 | Retained earnings | 78,700 |
Total assets | $ 253,200 | Total liabilities and equity | $ 253,200 |
CABOT CORPORATION | |
Income Statement | |
For Current Year Ended December 31 | |
Sales | $ 450,600 |
---|---|
Cost of goods sold | 298,550 |
Gross profit | 152,050 |
Operating expenses | 99,100 |
Interest expense | 4,600 |
Income before taxes | 48,350 |
Income tax expense | 19,477 |
Net income | $ 28,873 |
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.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started