Question
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, $169,400; common stock, $86,000; and retained earnings, $43,796.)
CABOT CORPORATION Income Statement For Year Ended December 31, 2017 | |||
Sales | $ | 456,600 | |
Cost of goods sold | 298,250 | ||
Gross profit | 158,350 | ||
Operating expenses | 98,600 | ||
Interest expense | 4,900 | ||
Income before taxes | 54,850 | ||
Income taxes | 22,096 | ||
Net income | $ | 32,754 | |
CABOT CORPORATION Balance Sheet December 31, 2017 | |||||||
Assets | Liabilities and Equity | ||||||
Cash | $ | 16,000 | Accounts payable | $ | 19,500 | ||
Short-term investments | 9,400 | Accrued wages payable | 3,000 | ||||
Accounts receivable, net | 33,600 | Income taxes payable | 4,000 | ||||
Notes receivable (trade)* | 5,000 | ||||||
Merchandise inventory | 40,150 | Long-term note payable, secured by mortgage on plant assets | 68,400 | ||||
Prepaid expenses | 3,000 | Common stock | 86,000 | ||||
Plant assets, net | 150,300 | Retained earnings | 76,550 | ||||
Total assets | $ | 257,450 | Total liabilities and equity | $ | 257,450 | ||
* 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. (Do not round intermediate calculations.)
1& 2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
Current Ratio (1) Choose Numerator: Choose Denominator: Current Ratio / Current ratio 2017: 0 to 1 = Acid-Test Ratio 2 Choose Denominator: Choose Numerator: Acid-Test Ratio Acid-Test Ratio 2017: 0 to 1 = Days' Sales Uncollected (3) Choose Numerator: / Choose Denominator: Days Days Sales Uncollected X / Days sales uncollected X = O days 2017: / X Inventory Turnover (4) Choose Denominator: Choose Numerator: Inventory Turnover / Inventory turnover 0 times 2017: III Days' Sales in Inventory (5) Choose Denominator: Choose Numerator: / Days Days' Sales in Inventory X Days' sales in inventory 2017: 0 days X Debt-to-Equity Ratio (6) Debt-to-Equity Ratio Choose Numerator: Choose Denominator: Debt-to-equity ratio = 2017: 0 to 1 Times Interest Earned (7) Choose Numerator: Choose Denominator: Times Interest Earned Times interest earned 0 times 2017: + | Profit Margin Ratio (8) Choose Numerator: Choose Denominator: Profit margin ratio Profit margin ratio / = 0% 2017: Total Asset Turnover (9) Choose Numerator: Choose Denominator: Total Asset Turnover Total asset turnover 0 times 2017: Return on Total Assets (10) Choose Denominator: Choose Numerator: Return on Total Assets / Return on total assets 2017: 0 % Return on Common Stockholders' Equity (11) =Return On Common Stockholders' Equity Choose Numerator: / Choose Denominator Return on common stockholders' equity 2017 /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