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, $189,400; common stock, $80,000; and retained earnings, $35,894.) $ Assets Cash Short-term investments Accounts receivable, net Merchandise inventory CABOT CORPORATION Balance Sheet December 31 Liabilities and Equity $ 10,000 Accounts payable 9,000 Accrued wages payable 32,000 Income taxes payable 34,150 Long-term note payable, secured by mortgage on plant assets 2,500 Common stock 151,300 Retained earnings $ 238,950 Total liabilities and equity 17,500 3,400 4,300 65,400 Prepaid expenses Plant assets, net Total assets 80,000 68, 350 $ 238,950 CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 454,600 Cost of goods sold 297,650 Gross profit 156,950 Operating expenses 98,700 Interest expense 3,900 Income before taxes 54,350 Income tax expense Net income 32,456 21,894 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.) Req 1 and 2 Req 3 Req 4 Reg 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the current ratio and acid-test ratio. (1) Current Ratio Choose Numerator: Choose Denominator: = = Current Ratio Current assets / Current liabilities II = Current ratio $ 86,900 / $ 24,000 II = 3.6 to 1 (2) Acid-Test Ratio Choose Numerator: 1 Choose Denominator: = Acid-Test Ratio Quick assets 1 Current liabilities = Acid-Test Ratio $ 52,100 1 $ 24,000 2.2 to 1 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 Choose Denominator: X Days Choose Numerator: / = Days Sales Uncollected = Days sales uncollected = 0 days 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 Choose Numerator: / Choose Denominator: = = Inventory Turnover Inventory turnover 0 times Req 1 and 2 Reg 3 Req 4 Reg 5 Req 6 Req 7 Reg 8 Reg 9 Req 10 Req 11 Compute the days' sales in inventory. (5) Days' Sales in Inventory Choose Denominator: Choose Numerator: 1 Days Days' Sales in Inventory Days' sales in inventory = x = 0 days Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Reg 8 Reg 9 Req 10 Req 11 Compute the debt-to-equity ratio. (6) Debt-to-Equity Ratio Choose Numerator: 1 Choose Denominator: = Debt-to-Equity Ratio Debt-to-equity ratio / = / = 0 to 1 Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Reg 9 Req 10 Reg 11 Compute the times interest earned. (7) Times Interest Earned Choose Numerator: Choose Denominator: = Times Interest Earned + II = Times interest earned + II = 0 times Req 1 and 2 Reg 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the profit margin ratio. (8) Profit Margin Ratio Choose Numerator: / Choose Denominator: = Profit margin ratio Profit margin ratio 1 = II = 0 % Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the total asset turnover. (9) Total Asset Turnover Choose Numerator: 1 Choose Denominator: Il = Total Asset Turnover II Total asset turnover = II 0 times Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the return on total assets. (10) Return on Total Assets Choose Numerator: 1 Choose Denominator: II Return on Total Assets 1 = II Return on total assets 1 = II 0 % Req 1 and 2 Reg 3 Req 4 Reg 5 Reg 6 Req 7 Req 8 Req 9 Req 10 Req 11 Compute the return on common stockholders' equity. (11) Return on Common Stockholders' Equity. 1 Choose Denominator Choose Numerator: Return On Common Stockholders' Equity Return on common stockholders' equity / = = 0 %