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, $56,900; total assets, $219,400; common stock, $88,000; and retained earnings, $26,363.) 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 $ 12,000 Accounts payable 9,200 Accrued wages payable 29,400 Income taxes payable 32,150 Long-term note payable, secured by mortgage on plant assets 2,958 Common stock 153,300 Retained earnings $239,000 Total liabilities and equity For Current Year Ended December 31 Sales Cost of goods sold $ 448,600 $17,500 3,200 4,500 71,400 88,000 54,400 $ 239,000 Gross profit Operating expenses Interest expense Income tax expense Net income Income before taxes 297,550 151,050 99,300 4,800 46,950 18,913 $28,037 Required: Req 1 and 2. Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the debt-to-equity ratio. (6) Debt-to-Equity Ratio Numerator: Denominator: Total liabilities Total equity Debt-to-Equity Ratio Debt-to-equity ratio 0 to 1 < Req 5 Req 7 >