Problem 17-4A 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, $50,900; total assets, $249.400; common stock, $83,000; and retained earnings, $40,128.) CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 453,600 Cost of goods sold 297,750 Gross profit 155,856 Operating expenses 99,400 Interest expense 4,500 Income before taxes 51,950 Income tax expense 20,928 Net income 31,022 $ Assets Cash Short-term investments Accounts receivable, net Merchandise inventory CABOT CORPORATION Balance Sheet December 31 Liabilities and Equity $ 12,000 Accounts payable 8,200 Accrued wages payable 34,000 Income taxes payable 34,150 Long-term note payable, secured by mortgage on plant assets 3,100 Common stock 151,300 Retained earnings $ 242,750 Total liabilities and equity 18,500 4,200 3,500 62,400 Prepaid expenses Plant assets, net Total assets 83,000 71,150 $ 242,750 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 Reg 3 Reg 4 Reg 5 Reg 6 Req 7 Reg 8 Reg 9 Reg 10 Reg 11 Compute the current ratio and acid-test ratio. (1) Current Ratio Choose Denominator: Current liabilities Choose Numerator: Current assets Current Ratio 1 Current ratio 0 to 1 1 (2) Acid-Test Ratio Choose Denominator: Choose Numerator: 1 Acid-Test Ratio Acid-Test Ratio 0 to 1 Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Req 4 Reg 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the days' sales uncollected. (3) Days' Sales Uncollected Choose Numerator: / Choose Denominator: Days Days Sales Uncollected Days sales uncollected o days Req 1 and 2 Req3 Req 4 Req 5 Req 6 Req 7 Req8 Req 9 Req 10 Req 11 Compute the inventory turnover. Inventory Turnover Choose Numerator: / Choose Denominator: Inventory Turnover Inventory turnover / / 0 times Req 1 and 2 Reg 3 Req 4 Req 5 Req 6 Req 7 Req 8 Reg 9 Req 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 1 = 1 X o days Req 4 Req 6 > Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Reg 10 Reg 11 Compute the debt-to-equity ratio. (6) Debt-to-Equity Ratio Choose Numerator: 1 Choose Denominator: Debt-to-Equity Ratio Debt-to-equity ratio / 1 0 to 1 Req 1 and 2 Req 3 Reg 4 Reg 5 Reg 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the times interest earned. (7) Times Interest Earned Choose Numerator: 1 Choose Denominator: II Times Interest Earned + / Times interest earned + 1 0 times Req 1 and 2 Req 3 Reg 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the profit margin ratio. (8) Profit Margin Ratio Choose Numerator: 1 Choose Denominator: Profit margin ratio Profit margin ratio 1 0 % Req 1 and 2 Req 3 Reg 4 Req 5 Req 6 Req 7 Req 8 Reg 9 Req 10 Req 11 Compute the total asset turnover. (9) Total Asset Turnover Choose Numerator: / Choose Denominator: Total Asset Turnover 1 Total asset turnover 1 11 0 times Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Reg 9 Req 10 Req 11 Compute the return on total assets. (10) Return on Total Assets Choose Numerator: 1 Choose Denominator: Return on Total Assets / Return on total assets / 0 % Req 1 and 2 Req 3 Reg 4 Req 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. Choose Numerator: 1 Choose Denominator Return On Common Stockholders' Equity Return on common stockholders' equity / / 0 %