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, $259,400; common stock, $86,000; and retained earnings, $36,105.) CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity Assets Cash Short-term investments Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets $ 18,000 Accounts payable 8,200 Accrued wages payable 29,200 Income taxes payable 38,150 Long-term note payable, secured by mortgage on plant assets 3,050 150,300 Common stock Retained earnings $ 246,900 Total liabilities and equity CABOT CORPORATION Income Statement For Current Year Ended December 31 $ 18,500 4,600 3,900 69,400 86,000 64,500 $ 246,900 Sales Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes Income tax expense Net income Required: $ 449,600 298,250 151,350 99,000 4,800 47,550 19,155 $ 28,395 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) Numerator: 1 Current Ratio Denominator: (2) Acid-Test Ratio Numerator: 1 Denominator: 1 1 Current Ratio = Current ratio to 1 Acid-Test Ratio = Acid-Test Ratio = to 1 < Req 1 and 2 Req 3 > Compute the days' sales uncollected. (3) Days' Sales Uncollected Numerator: 1 Denominator: x Days = Days Sales Uncollected x = Days sales uncollected x = days < Req 1 and 2 Req 4 > Compute the inventory turnover. (4) Numerator: Inventory Turnover Denominator: 1 = Inventory Turnover = Inventory turnover times < Req 3 Req 5 > Compute the days' sales in inventory. (5) Numerator: 1 I 1 Days' Sales in Inventory. Denominator: < Req 4 Days = Days' Sales in Inventory = Days' sales in inventory x days Req 6 > Compute the debt-to-equity ratio. (6) Debt-to-Equity Ratio Denominator: Numerator: 1 1 Debt-to-Equity Ratio = Debt-to-equity ratio = to 1 < Req 5 Req 7 > Compute the times interest earned. (7) Times Interest Earned Numerator: I Denominator: = Times Interest Earned = Times interest earned = times < Req 6 Req 8 > Compute the profit margin ratio. (8) Profit Margin Ratio Numerator: I Denominator: = Profit margin ratio 1 = Profit margin ratio = % < Req 7 Req 9 > Compute the total asset turnover. (9) Numerator: I 1 Total Asset Turnover Denominator: Total Asset Turnover = Total asset turnover = times < Req 8 Req 10 > Compute the return on total assets. (10) Numerator: Return on Total Assets Denominator: I = Return on Total Assets = Return on total assets = % < Req9 Req 11 > Compute the return on equity. (11) Numerator: Return on Equity. Denominator = Return On Equity = Return on equity = % < Req 10 Req 11 >