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Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2016, were inventory, $46,900; total
Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2016, were inventory, $46,900; total assets, $249,400; common stock, $88,000; and retained earnings, $28,156.)
CABOT CORPORATION Income Statement For Year Ended December 31, 2017 | |||
Sales | $ | 450,600 | |
Cost of goods sold | 298,250 | ||
Gross profit | 152,350 | ||
Operating expenses | 99,600 | ||
Interest expense | 4,700 | ||
Income before taxes | 48,050 | ||
Income taxes | 19,356 | ||
Net income | $ | 28,694 | |
CABOT CORPORATION Balance Sheet December 31, 2017 | |||||||
Assets | Liabilities and Equity | ||||||
Cash | $ | 8,000 | Accounts payable | $ | 16,500 | ||
Short-term investments | 8,400 | Accrued wages payable | 3,200 | ||||
Accounts receivable, net | 31,200 | Income taxes payable | 4,100 | ||||
Notes receivable (trade)* | 5,500 | ||||||
Merchandise inventory | 30,150 | Long-term note payable, secured by mortgage on plant assets | 69,400 | ||||
Prepaid expenses | 2,500 | Common stock | 88,000 | ||||
Plant assets, net | 152,300 | Retained earnings | 56,850 | ||||
Total assets | $ | 238,050 | Total liabilities and equity | $ | 238,050 | ||
1) Compute the days' sales in inventory.
2) Compute the debt-to-equity ratio.
3) Compute the times interest earned.
4) Compute the profit margin ratio.
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