Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Selected current year - end financial statements of Cabot Corporation follow. ( All sales were on credit; selected balance sheet amounts at December 3 1

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, $55,900; total assets, $209,400; common stock, $85,000; and retained earnings, $36,261.)
CABOT CORPORATION
Balance Sheet
December 31 of current year
Assets Liabilities and Equity
Cash $ 14,000 Accounts payable $ 15,500
Short-term investments 8,600 Accrued wages payable 4,200
Accounts receivable, net 29,600 Income taxes payable 3,400
Merchandise inventory 36,150 Long-term note payable, secured by mortgage on plant assets 65,400
Prepaid expenses 2,700 Common stock 85,000
Plant assets, net 148,300 Retained earnings 65,850
Total assets $ 239,350 Total liabilities and equity $ 239,350
CABOT CORPORATION
Income Statement
For Current Year Ended December 31
Sales $ 451,600
Cost of goods sold 298,350
Gross profit 153,250
Operating expenses 99,500
Interest expense 4,200
Income before taxes 49,550
Income tax expense 19,961
Net income $ 29,589
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

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Kermit D. Larson, William W. Pyle

4th Edition

0256067813, 978-0256067811

More Books

Students also viewed these Accounting questions