Question
Problem 17-4A 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 17-4A 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, $50,900; total assets, $209,400; common stock, $85,000; and retained earnings, $42,075.) CABOT CORPORATION Income Statement For Year Ended December 31, 2017 Sales $452,600 Cost of goods sold 298,550 Gross profit 154,050 Operating expenses 99,100 Interest expense 4,000 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 $20,000 Accounts payable $19,500 Short-term investments 8,400 Accrued wages payable 4,800 Accounts receivable, net 30,200 Income taxes payable 3,400 Notes receivable (trade)* 4,500 Merchandise inventory 32,150 Long-term note payable, secured by mortgage on plant assets 63,400 Prepaid expenses 3,050 Common stock 85,000 Plant assets, net 150,300 Retained earnings 72,500 Total assets $248,600 Total liabilities and equity $248,600 * 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.)
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