### Cabot Corporation Financial Statements **For the Year Ended December 31** #### Income Statement - **Sales:** $454,600 - **Cost of Goods Sold:** $298,450 - **Gross Profit:** $156,150 - **Operating Expenses:** $94,980 - **Interest Expense:** $5,450 - **Income Before Taxes:** $55,720 - **Income Tax Expense:** $21,100 - **Net Income:** $31,321 #### Balance Sheet **As of December 31** **Assets** - **Cash:** $10,000 - **Short-term Investments:** $8,000 - **Accounts Receivable, Net:** $28,250 - **Merchandise Inventory:** $10,150 **Liabilities and Equity** - **Accounts Payable:** $15,500 - **Accrued Wages Payable:** $3,000 - **Income Taxes Payable:** $3,700 - **Long-term Note Payable, Secured by Mortgage on Plant Assets:** $65,400 These statements provide an overview of Cabot Corporation's financial performance over the year, reflecting its sales, expenses, and net income, as well as detailing the assets and liabilities as of the end of the year. # Financial Ratios Analysis ### Required Calculations: 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** 11. **Return on Common Stockholders’ Equity** **Note:** Do not round intermediate calculations. ### Instructions: Complete this question by entering your answers in the provided tabs. ### Table: The table in the image assists you in selecting numerators and denominators to compute the: - **Current Ratio:** - Choose a numerator and a denominator from the options to calculate the current ratio. - **Acid-Test Ratio:** - Again, select appropriate values to compute the acid-test ratio. This exercise encourages strengthening your understanding of these financial metrics, crucial for evaluating a company’s financial health. ### Navigation: To move through additional requirements or to enter more data, use the tabs at the top, organized from Req 1 to Req 11, with options to ‘Next’ for more pages. This structured format is designed to guide students through various financial computations systematically.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Selected current year end financial statement of Cabot corporation follow. (all sales were on credit selected balance sheet amounts at December 31st of the prior year were inventory $47,900 total asset $189,400 common stock $90,000 and retained earrings $31629)

### Cabot Corporation Financial Statements

**For the Year Ended December 31**

#### Income Statement

- **Sales:** $454,600
- **Cost of Goods Sold:** $298,450
- **Gross Profit:** $156,150
- **Operating Expenses:** $94,980
- **Interest Expense:** $5,450
- **Income Before Taxes:** $55,720
- **Income Tax Expense:** $21,100
- **Net Income:** $31,321

#### Balance Sheet

**As of December 31**

**Assets**
- **Cash:** $10,000
- **Short-term Investments:** $8,000
- **Accounts Receivable, Net:** $28,250
- **Merchandise Inventory:** $10,150

**Liabilities and Equity**
- **Accounts Payable:** $15,500
- **Accrued Wages Payable:** $3,000
- **Income Taxes Payable:** $3,700
- **Long-term Note Payable, Secured by Mortgage on Plant Assets:** $65,400

These statements provide an overview of Cabot Corporation's financial performance over the year, reflecting its sales, expenses, and net income, as well as detailing the assets and liabilities as of the end of the year.
Transcribed Image Text:### Cabot Corporation Financial Statements **For the Year Ended December 31** #### Income Statement - **Sales:** $454,600 - **Cost of Goods Sold:** $298,450 - **Gross Profit:** $156,150 - **Operating Expenses:** $94,980 - **Interest Expense:** $5,450 - **Income Before Taxes:** $55,720 - **Income Tax Expense:** $21,100 - **Net Income:** $31,321 #### Balance Sheet **As of December 31** **Assets** - **Cash:** $10,000 - **Short-term Investments:** $8,000 - **Accounts Receivable, Net:** $28,250 - **Merchandise Inventory:** $10,150 **Liabilities and Equity** - **Accounts Payable:** $15,500 - **Accrued Wages Payable:** $3,000 - **Income Taxes Payable:** $3,700 - **Long-term Note Payable, Secured by Mortgage on Plant Assets:** $65,400 These statements provide an overview of Cabot Corporation's financial performance over the year, reflecting its sales, expenses, and net income, as well as detailing the assets and liabilities as of the end of the year.
# Financial Ratios Analysis

### Required Calculations:
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**
11. **Return on Common Stockholders’ Equity**

**Note:** Do not round intermediate calculations.

### Instructions:
Complete this question by entering your answers in the provided tabs.

### Table:
The table in the image assists you in selecting numerators and denominators to compute the:

- **Current Ratio:**
  - Choose a numerator and a denominator from the options to calculate the current ratio.
- **Acid-Test Ratio:**
  - Again, select appropriate values to compute the acid-test ratio.

This exercise encourages strengthening your understanding of these financial metrics, crucial for evaluating a company’s financial health. 

### Navigation:
To move through additional requirements or to enter more data, use the tabs at the top, organized from Req 1 to Req 11, with options to ‘Next’ for more pages.

This structured format is designed to guide students through various financial computations systematically.
Transcribed Image Text:# Financial Ratios Analysis ### Required Calculations: 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** 11. **Return on Common Stockholders’ Equity** **Note:** Do not round intermediate calculations. ### Instructions: Complete this question by entering your answers in the provided tabs. ### Table: The table in the image assists you in selecting numerators and denominators to compute the: - **Current Ratio:** - Choose a numerator and a denominator from the options to calculate the current ratio. - **Acid-Test Ratio:** - Again, select appropriate values to compute the acid-test ratio. This exercise encourages strengthening your understanding of these financial metrics, crucial for evaluating a company’s financial health. ### Navigation: To move through additional requirements or to enter more data, use the tabs at the top, organized from Req 1 to Req 11, with options to ‘Next’ for more pages. This structured format is designed to guide students through various financial computations systematically.
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