Question
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, $189,400; common stock, $87,000; and retained earnings, $31,139.)
CABOT CORPORATION Income Statement For Current Year Ended December 31 | |||
Sales | $ | 456,600 | |
Cost of goods sold | 297,350 | ||
Gross profit | 159,250 | ||
Operating expenses | 99,200 | ||
Interest expense | 4,100 | ||
Income before taxes | 55,950 | ||
Income tax expense | 22,539 | ||
Net income | $ | 33,411 | |
CABOT CORPORATION Balance Sheet December 31 | |||||||
Assets | Liabilities and Equity | ||||||
Cash | $ | 14,000 | Accounts payable | $ | 15,500 | ||
Short-term investments | 9,400 | Accrued wages payable | 3,000 | ||||
Accounts receivable, net | 31,400 | Income taxes payable | 3,800 | ||||
Merchandise inventory | 36,150 | Long-term note payable, secured by mortgage on plant assets | 69,400 | ||||
Prepaid expenses | 3,000 | Common stock | 87,000 | ||||
Plant assets, net | 149,300 | Retained earnings | 64,550 | ||||
Total assets | $ | 243,250 | Total liabilities and equity | $ | 243,250 | ||
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.
Compute the current ratio and acid-test ratio. (1) Current Ratio Choose Numerator: / Choose Denominator: Current Ratio / Current ratio / to 1 (2) Acid-Test Ratio Choose Numerator: 1 Choose Denominator: Acid-Test Ratio / Acid-Test Ratio 1 to 1 Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Req 4 Reg 5 Reg 6 Req 7 Req 8 Req 9 Req 10 Compute the days' sales uncollected. (3) Days' Sales Uncollected Choose Numerator: 1 Choose Denominator: Days = Days Sales Uncollected / Days sales uncollected / X 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 Compute the inventory turnover. (4) Inventory Turnover Choose Numerator: / Choose Denominator: Inventory Turnover Inventory turnover 1 / times 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 Compute the days' sales in inventory. (5) Days' Sales in Inventory. Choose Denominator: Choose Numerator: 1 Days Days' Sales in Inventor Days' sales in inventory / 1 days Compute the debt-to-equity ratio. (6) Debt-to-Equity Ratio Choose Denominator: Choose Numerator: 1 Debt-to-Equity Ratio Debt-to-equity ratio / to 1 Compute the times interest earned. (7) Times Interest Earned Choose Numerator: 1 Choose Denominator: Il Times Interest Earned Times interest earned II + times Compute the profit margin ratio. (8) Profit Margin Ratio Choose Numerator: / Choose Denominator: Profit margin ratio Profit margin ratio 1 = / 0 % Compute the total asset turnover. (9) Total Asset Turnover Choose Denominator: Choose Numerator: Total Asset Turnover 1 Total asset turnover / o times Compute the return on total assets. (10) Return on Total Assets Choose Numerator: 1 Choose Denominator: Return on Total Assets 1 Return on total assets / 0 % Compute the return on common stockholders' equity. (11) Return on Common Stockholders' Equity Choose Numerator: Choose Denominator = Return On Common Stockholders' Equity = Return on common stockholders' equity 1 0 %Step by Step Solution
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