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, $53,900; total assets, $219,400; common stock, $84,000; and retained earnings, $28,230.) CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 450,600 Cost of goods sold 297,950 Gross profit 152,650 Operating expenses 98,600 Interest expense 4,700 Income before taxes 49,350 Income tax expense 19,880 Net income $ 29, 470 $ Assets Cash Short-term investments Accounts receivable, net Merchandise inventory CABOT CORPORATION Balance Sheet December 31 Liabilities and Equity $ 20,000 Accounts payable 8,600 Accrued wages payable 29,800 Income taxes payable 30,150 Long-term note payable, secured by mortgage on plant assets 2,850 Common stock 150,300 Retained earnings $ 241,700 Total liabilities and equity 19,500 4,000 4,100 72,400 Prepaid expenses Plant assets, net Total assets 84,000 57,700 $ 241,700 Required: Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Compute the current ratio and acid-test ratio. (1) Current Ratio Choose Denominator: Choose Numerator: = | = Current Ratio Current ratio 0 to 1 (2) Acid-Test Ratio 1 Choose Denominator: Choose Numerator: = = Acid-Test Ratio Acid-Test Ratio 0 to 1 Reg 1 and 2 Req3 > DO POLO CIT DODD TOON (3) Days' Sales Uncollected 1 Choose Denominator: x Days Choose Numerator: - = Days Sales Uncollected Days sales uncollected 0 days Req 1 and 2 Req 4 > Req 1 and 2 Req3 Req 4 Req 5 Req 6 Req 7 Req8 Req 9 Req 1 Compute the days' sales in inventory. (5) Days' Sales in Inventory T Choose Denominator: Choose Numerator: x Days = = = Days' Sales in Inven Days' sales in inventor 0 days x Req 1 and 2 Req3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Compute the debt-to-equity ratio. (6) Debt-to-Equity Ratio 1 Choose Denominator: Choose Numerator: = | = Debt-to-Equity Ratio Debt-to-equity ratio 0 to 1 Req 1 and 2 Reg 3 Reg 4 Req 5 Req 5 Reg 6 Rego Req 7 Reg Req 8 Rege Req9 Req 9 Reg 1 Compute the times interest earned. (7) Times Interest Earned Choose Denominator: Choose Numerator: Times Ini Times inte Req 1 and 2 Req3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Red Compute the profit margin ratio. (8) Profit Margin Ratio Choose Denominator: Choose Numerator: = Profit margin ratio Profit margin ratio 0 % Req 1 and 2 Req 1 and 2 Reg 3 Req 4 Reg4 Req5 Rego Req 7 Reg7 Req 8 Req 9 Reg 1 Compute the total asset turnover. (9) Total Asset Turnover Choose Denominator: Choose Numerator: 1 = = Total Asset Turnover Total asset turnover 0 times Req 1 and 2 Req3 Reg 4 Req 5 Req 6 Req 7 Req 8 Req9 Reg 1 Compute the return on common stockholders' equity. (11) Return on Common Stockholders' Equity. Choose Denominator Choose Numerator:
