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, $83,000; and retained earnings, $47,115.) CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 455, 600 Cost of goods sold 298, 050 Gross profit 157, 550 Operating expenses 98,500 Interest expense 4,400 Income before taxes 54, 650 Income tax expense 22,015 Net income $ 32,635 $ Assets Cash Short-term investments Accounts receivable, net Merchandise inventory CABOT CORPORATION Balance Sheet December 31 Liabilities and Equity $ 20,000 Accounts payable 8,800 Accrued wages payable 31,000 Income taxes payable 38,150 Long-term note payable, secured by mortgage on plant assets 2,600 Common stock 152, 300 Retained earnings $ 252,850 Total liabilities and equity 17,500 4,800 3,400 64,400 Prepaid expenses Plant assets, net Total assets 83,000 79.750 $ 252, 850 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.) Compute the current ratio and acid-test ratio. (1) Current Ratio I Choose Denominator: Choose Numerator: = Current Ratio Current ratio Acid-Test Ratio Choose Denominator: Choose Numerator: = Acid-Test Ratio (3) Days' Sales Uncollected Choose Denominator: x Days Choose Numerator: I = Days Sales Uncollected Days sales uncollected days Inventory Turnover Choose Denominator: Choose Numerator: = = Inventory Turnover Inventory turnover times (5) Days' Sales in Inventory. Choose Denominator: Choose Numerator: I x Days = Days' Sales in Inventory Days' sales in inventory days (6) Debt-to-Equity Ratio 1 Choose Denominator: Choose Numerator: = Debt-to-Equity Ratio Debt-to-equity ratio Times Interest Earned Choose Numerator: 1 Choose Denominator: = Times Interest Earned Times interest earned times (8) Profit Margin Ratio Choose Denominator: Choose Numerator: = Profit margin ratio Profit margin ratio Total Asset Turnover I Choose Denominator: Choose Numerator: = = Total Asset Turnover Total asset turnover times (10) Return on Total Assets I Choose Denominator: Choose Numerator: = Return on Total Assets Return on total assets Return on Common Stockholders' Equity Choose Denominator Choose Numerator: = Return On Common Stockholders' Equity = Return on common stockholders' equity
