Question
Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2015, were inventory, $51,900; total
Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2015, were inventory, $51,900; total assets, $229,400; common stock, $84,000; and retained earnings, $55,672.)
CABOT CORPORATION
Income Statement
For Year Ended December 31, 2016Sales$450,600Cost of goods sold296,850Gross profit153,750Operating expenses99,300Interest expense4,500Income before taxes49,950Income taxes20,122Net income$29,828
CABOT CORPORATION
Balance Sheet
December 31, 2016AssetsLiabilities and EquityCash$20,000Accounts payable$17,500Short-term investments9,400Accrued wages payable3,000Accounts receivable, net30,600Income taxes payable3,200Notes receivable (trade)*5,000Long-term note payable, securedMerchandise inventory34,150by mortgage on plant assets63,400Prepaid expenses3,150Common stock84,000Plant assets, net154,300Retained earnings85,500Total assets$256,600Total liabilities and equity$256,600* These are short-term notes receivable arising from customer (trade) sales.
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
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started