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, $229,400; common stock, $88,000; and retained earnings, $37,446.) CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 451,600 Cost of goods sold 297,150 Gross profit 154,450 Operating expenses 99,000 Interest expense 4,200 Income before taxes 51, 250 Income tax expense 20,646 Net income $ 30,604 Assets Cash Short-term investments Accounts receivable, net Merchandise inventory CABOT CORPORATION Balance Sheet December 31 Liabilities and Equity $ 18,000 Accounts payable 8,200 Accrued wages payable 32,400 Income taxes payable 40,150 Long-term note payable, secured by mortgage on plant assets 2,700 Common stock 148,300 Retained earnings $ 249,750 Total liabilities and equity $ 16,500 4,800 4,000 68,400 Prepaid expenses Plant assets, net Total assets 88,000 68,050 $ 249,750 Compute the current ratio and acid-test ratio. (1) Current Ratio Choose Numerator: 1 Choose Denominator: Current Ratio Current ratio 1 0 to 1 (2) Acid-Test Ratio Choose Numerator: Choose Denominator: Acid-Test Ratio / Acid-Test Ratio 11 0 to 1 Compute the days' sales uncollected. (3) Days' Sales Uncollected Choose Denominator: Days Choose Numerator: Days Sales Uncollected 1 X II Days sales uncollected / = 0 days Compute the inventory turnover. (4) Inventory Turnover Choose Numerator: Choose Denominator: Inventory Turnover Inventory turnover / = 0 times Req 5 ute the days' sales in inventory. (5) Days' Sales in Inventory Choose Denominator: Choose Numerator: 1 Days Days' Sales in Inventory Days' sales in inventory 1 II 0 days Compute the debt-to-equity ratio. (6) Debt-to-Equity Ratio Choose Numerator: Choose Denominator: = Debt-to-Equity Ratio Debt-to-equity ratio / II II 0 to 1 Compute the times interest earned. (7) Times Interest Earned Choose Numerator: - Choose Denominator: II Times Interest Earned + = Times interest earned 1 / + = 0 times Compute the profit margin ratio. (8) Profit Margin Ratio Choose Numerator: 1 Choose Denominator: Profit margin ratio Profit margin ratio 0 % Compute the total asset turnover. (9) Total Asset Turnover Choose Numerator: Choose Denominator: = Total Asset Turnover Total asset turnover II 0 times Compute the return on total assets. (10) Return on Total Assets Choose Numerator: Choose Denominator: II Return on Total Assets II Return on total assets 0 % Compute the return on common stockholders' equity. (11) Return on Common Stockholders' Equity Choose Numerator: Choose Denominator II Return On Common Stockholders' Equity Return on common stockholders' equity = 0 %
