Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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, $239,400; common stock, $87,000; and retained earnings, $35,855.)

CABOT CORPORATION
Balance Sheet
December 31 of current year
Assets Liabilities and Equity
Cash $ 10,000 Accounts payable $ 17,500
Short-term investments 8,200 Accrued wages payable 5,000
Accounts receivable, net 32,800 Income taxes payable 2,900
Merchandise inventory 34,150 Long-term note payable, secured by mortgage on plant assets 62,400
Prepaid expenses 2,600 Common stock 87,000
Plant assets, net 151,300 Retained earnings 64,250
Total assets $ 239,050 Total liabilities and equity $ 239,050

CABOT CORPORATION
Income Statement
For Current Year Ended December 31
Sales $ 447,600
Cost of goods sold 296,950
Gross profit 150,650
Operating expenses 98,900
Interest expense 4,200
Income before taxes 47,550
Income tax expense 19,155
Net income $ 28,395

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 equity. (Do not round intermediate calculations.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Principles

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Steinbart Romney B.

9th International Edition

0470409460, 978-0470409466

More Books

Students also viewed these Accounting questions