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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
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, $49,900; total assets, $199,400; common stock, $89,000; and retained earnings, $33,161.) Assets Cash Short-term investments Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets CABOT CORPORATION Income Statement CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity Accounts payable $ 8,000 9,400 Accrued wages payable 32,800 40,150 Income taxes payable Long-term note payable, secured by mortgage on plant assets 2,950 152,300 Common stock Retained earnings $ 245,600 Total liabilities and equity $ 16,500 4,400 4,400 66,400 89,000 64,900 $ 245,600 For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes Income tax expense Net income Required: $ 453,600 297,550 156,050 98,900 4,000 53,150 21,411 $ 31,739 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. (Do not round intermediate calculations.) Compute the current ratio and acid-test ratio. (1) (2) Numerator: Current Ratio Denominator: Acid-Test Ratio Numerator: Denominator: < Req 1 and 2 = Current Ratio = Current ratio = 0 to 1 = Acid-Test Ratio = Acid-Test Ratio = Req 3 > 0 to 1 Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the days' sales uncollected. (3) Days' Sales Uncollected Numerator: Denominator: Days Days Sales Uncollected < Req 1 and 2 Req 4 > Days sales uncollected 0 days Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the inventory turnover. (4) Inventory Turnover Numerator: Denominator: Cost of goods sold Average inventory $ 297,550 / = Inventory Turnover = Inventory turnover = 0 times < Req 3 Req 5 > Compute the days' sales in inventory. (5) Numerator: Days' Sales in Inventory. Denominator: Days = Days' Sales in Inventory = Days' sales in inventory = 0 days < Req 4 Req 6 > Compute the debt-to-equity ratio. (6) Numerator: 1 Debt-to-Equity Ratio Denominator: = Debt-to-Equity Ratio = Debt-to-equity ratio = 0 to 1 < Req 5 Req 7 > Compute the times interest earned. (7) Numerator: Times Interest Earned + + Denominator: = Times Interest Earned = = Times interest earned 0 times < Req 6 Req 8 > Compute the profit margin ratio. (8) Numerator: Profit Margin Ratio Denominator: = Profit margin ratio = Profit margin ratio = 0% < Req 7 Req 9 > Compute the total asset turnover. (9) Numerator: Total Asset Turnover Denominator: = Total Asset Turnover = Total asset turnover 0 times < Req 8 Req 10 > Compute the return on total assets. (10) Numerator: Return on Total Assets Denominator: Return on Total Assets = Return on total assets 0% < Req 9 Req 11 > Compute the return on equity. (11) Numerator: Return on Equity Denominator < Req 10 = = Req 11 > Return On Equity Return on equity 0%
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