AssetsCashShort-term investmentsAccounts receivable, netMerchandise inventoryPrepaid expensesPlant assets, netTotal assetsCABOT CORPORATIONIncome StatementFor Current Year Ended December 31Sales$ 450,600298,350152,25099,3004,500Cost of goods soldGross profitOperating expensesInterest expense.Income before taxesIncome tax expenseNet income$ 10,000Accounts payableAccrued wages payable9,20031,400Income taxes payable30,150 Long-term note payable, secured by mortgage on plant assets3,050 Common stock152,300Retained earnings$ 236,100 Total liabilities and equityCABOT CORPORATIONBalance SheetDecember 31 of current yearLiabilities and Equity48,45019,518$ 28,932$ 17,5003,8004,70069,40088,00052,700$ 236,100Required: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) returnon equity. (Do not round intermediate calculations.)

For accounting purposes, financial ratios are a measure of liquidity, profitability, capital gearing…

Assets Cash Short-term investments Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 450,600 298,350 Cost of goods sold Gross profit Operating expenses Interest expense. Income before taxes' Income tax expense Net income $ 10,000 9,200 31,400 30,150 3,050 152,300 $ 236,100 Total liabilities and equity 152,250 99,300 4,500 CABOT CORPORATION Balance Sheet December 31 of current year. Liabilities and Equity Accounts payable Accrued wages payable Income taxes payable Long-term note payable, secured by mortgage on plant assets Common stock Retained earnings 48,450 19,518 $ 28,932 $ 17,500 3,800 4,700 69,400 88,000 52,700 $ 236,100 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 equity. (Do not round intermediate calculations.)

Assets Cash Short-term investments Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 450,600 298,350 Cost of goods sold Gross profit Operating expenses Interest expense. Income before taxes' Income tax expense Net income $ 10,000 9,200 31,400 30,150 3,050 152,300 $ 236,100 Total liabilities and equity 152,250 99,300 4,500 CABOT CORPORATION Balance Sheet December 31 of current year. Liabilities and Equity Accounts payable Accrued wages payable Income taxes payable Long-term note payable, secured by mortgage on plant assets Common stock Retained earnings 48,450 19,518 $ 28,932 $ 17,500 3,800 4,700 69,400 88,000 52,700 $ 236,100 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 equity. (Do not round intermediate calculations.)

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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Assets Line Item Description Amount Cash and short-term investments $42,572 Accounts receivable (net) 33,774 Inventory 37,691 Property, plant, and equipment 215,705 Total assets $329,742 Liabilities and Stockholders’ Equity Line Item Description Amount Current liabilities $68,960 Long-term liabilities 98,919 Common stock, $10 par 64,740 Retained earnings 97,123 Total liabilities and stockholders’ equity $329,742 Income Statement Line Item Description Amount Sales $91,805 Cost of goods sold (41,312) Gross profit $50,493 Operating expenses (28,002) Net income $22,491 Number of shares of common stock 6,474 Market price of common stock $28 What is the current ratio?
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