Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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, $56,900; total assets, $209,400; common stock, $89,000; and retained earnings, $16,697) CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 453,600 Cost of goods sold 297,850 Gross profit 155,750 Operating expenses 99,300 Interest expense 4,700 Income before taxes 51,750 Income tax expense 20,847 Net income $ 30,903 $ Assets Cash Short-term investments Accounts receivable, net Merchandise inventory CABOT CORPORATION Balance Sheet December 31 Liabilities and Equity $ 8,000 Accounts payable 8,600 Accrued wages payable 30,800 Income taxes payable 32,150 Long-term note payable, secured by mortgage on plant assets 2,750 Common stock 147,380 Retained earnings $ 229,600 Total liabilities and equity 17,500 4,400 4,700 66,400 Prepaid expenses Plant assets, net Total assets 89,000 47,600 $ 229,600 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. Req 1 and 2 Reg 3 Reg 4 Reg 5 Req6 Req 7 7 Req 8 Req9 Reg 10 Reg 11 Compute the current ratio and acid-test ratio. (1) Current Ratio Choose Numerator: Choose Denominator: 1 1 Current Ratio Current ratio 0 to 1 1 (2) Acid-Test Ratio 4 1 Choose Denominator: Choose Numerator: Acid-Test Ratio Acid-Test Ratio 0 to 1 1 Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Req 7 Reg 8 Reg 9 Reg 10 Reg 11 Compute the days' sales uncollected. (3) Days' Sales Uncollected Choose Denominator: Days Choose Numerator: Days Sales Uncollected = Days sales uncollected days Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Req 7 Req8 Reg 9 Reg 10 Reg 11 Compute the inventory turnover. (4) Inventory Turnover 1 Choose Denominator: Choose Numerator: Inventory Turnover Inventory turnover 0 times Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Req 4 Reg 5 Req 6 Reg 7 Req 8 Rea 9 Reg 10 Reg 11 Compute the days' sales in inventory. (5) Choose Numerator: Days' Sales in Inventory 1 Choose Denominator: Days - Days' Sales in Inventory = Days' sales in inventory 0 days X Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Reg 7 Reg 8 Reg 9 Reg 10 Reg 11 Compute the debt-to-equity ratio. (6) Debt-to-Equity Ratio Choose Denominator: Choose Numerator: 1 - Debt-to-Equity Ratio = Debt-to-equity ratio 0 to 1 Complete this question by entering your answers in the tabs below. Req 1 and 2 1 Reg 3 Reg 4 Reg 5 Reg 6 Reg 7 Reg 8 Reg 9 Req 10 Reg 11 Compute the times interest earned. (7) Times Interest Farned Choose Numerator: : Choose Denominator: Times Interest Earned Times interest eamed 0 times Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Reg 4 Reg 5 Req 6 Req 7 Req 8 Reg 9 Req 10 Reg 11 Compute the profit margin ratio. (8) Profit Margin Ratio Choose Denominator: Choose Numerator: 1 1 = Profit margin ratio Profit margin ratio = 0 % Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Reg 7 Reg 8 Reg 9 Reg 10 Req 11 Compute the total asset turnover. (9) Total Asset Turnover Choose Denominator: Choose Numerator: 1 Total Asset Turnover Total asset turnover 0 times 1 = Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Req 4 Reg 5 Reg 6 Req 7 Req 8 Req 9 Reg 10 Reg 11 Compute the return on total assets. (10) Return on Total Assets Choose Denominator: Choose Numerator: Return on Total Assets Return on total assets 0 % (11) Return on Common Stockholders' Equity Choose Denominator Choose Numerator: = Return On Common Stockholders' Equity = Return on common stockholders' equity 0 %
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