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, $55,900; 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, $55,900; total assets, $219,400; common stock, $85,000; and retained earnings, $42,307.)
CABOT CORPORATION Income Statement For Year Ended December 31, 2017 | |||
Sales | $ | 455,600 | |
Cost of goods sold | 297,250 | ||
Gross profit | 158,350 | ||
Operating expenses | 99,100 | ||
Interest expense | 4,000 | ||
Income before taxes | 55,250 | ||
Income taxes | 22,257 | ||
Net income | $ | 32,993 | |
CABOT CORPORATION Balance Sheet December 31, 2017Assets Liabilities and Equity Cash$18,000 Accounts payable$16,500 Short-term investments 9,400 Accrued wages payable 4,800 Accounts receivable, net 30,400 Income taxes payable 4,100 Notes receivable (trade)* 4,000 Merchandise inventory 36,150 Long-term note payable, secured by mortgage on plant assets 64,400 Prepaid expenses 2,850 Common stock 85,000 Plant assets, net 149,300 Retained earnings 75,300 Total assets$250,100 Total liabilities and equity$250,100
CABOT CORPORATION Balance Sheet December 31, 2017 | |||||||
Assets | Liabilities and Equity | ||||||
Cash | $ | 18,000 | Accounts payable | $ | 16,500 | ||
Short-term investments | 9,400 | Accrued wages payable | 4,800 | ||||
Accounts receivable, net | 30,400 | Income taxes payable | 4,100 | ||||
Notes receivable (trade)* | 4,000 | ||||||
Merchandise inventory | 36,150 | Long-term note payable, secured by mortgage on plant assets | 64,400 | ||||
Prepaid expenses | 2,850 | Common stock | 85,000 | ||||
Plant assets, net | 149,300 | Retained earnings | 75,300 | ||||
Total assets | $ | 250,100 | Total liabilities and equity | $ | 250,100 | ||
* 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.)
Compute the debt-to-equity ratio.
Compute the debt-to-equity ratio.
|
Compute the times interest earned.
|
-
Compute the profit margin ratio
(8) Profit Margin Ratio Choose Numerator: / Choose Denominator: = Profit margin ratio / = Profit margin ratio 2017: / = % -
(9) Total Asset Turnover Choose Numerator: / Choose Denominator: = Total Asset Turnover / = Total asset turnover 2017: / = times -
Compute the return on total assets.
(10) Return on Total Assets Choose Numerator: / Choose Denominator: = Return on Total Assets / = Return on total assets 2017: / = % -
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 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