Answered: Selected current year-end financial…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Selected current year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31 of the prior year were inventory, $49,900; total assets, $199,400; common stock, $86,000; and retained earnings, $37,787.)

CABOT CORPORATION Income Statement For Current Year Ended December 31
Sales	$	453,600
Cost of goods sold		297,750
Gross profit		155,850
Operating expenses		99,400
Interest expense		4,600
Income before taxes		51,850
Income tax expense		20,887
Net income	$	30,963

CABOT CORPORATION Balance Sheet December 31
Assets			Liabilities and Equity
Cash	$	20,000	Accounts payable	$	15,500
Short-term investments		8,200	Accrued wages payable		4,600
Accounts receivable, net		29,200	Income taxes payable		3,400
Merchandise inventory		36,150	Long-term note payable, secured by mortgage on plant assets		70,400
Prepaid expenses		2,800	Common stock		86,000
Plant assets, net		152,300	Retained earnings		68,750
Total assets	$	248,650	Total liabilities and equity	$	248,650

Required:
(1) days' sales in inventory, (1) debt-to-equity ratio, (2) times interest earned, (3) profit margin ratio, (4) total asset turnover, (5) return on total assets, and (6) return on common stockholders' equity. (Do not round intermediate calculations.)

Compute the debt-to-equity ratio.

(1)	Debt-to-Equity Ratio
	Choose Numerator:	/	Choose Denominator:	=	Debt-to-Equity Ratio
		/		=	Debt-to-equity ratio
		/		=	0	to 1

Compute the times interest earned.

(2)	Times Interest Earned
	Choose Numerator:	/	Choose Denominator:	=	Times Interest Earned
		+		/		=	Times interest earned
		+		/		=	0	times

Compute the profit margin ratio.

(3)	Profit Margin Ratio
	Choose Numerator:	/	Choose Denominator:	=	Profit margin ratio
		/		=	Profit margin ratio
		/		=	0	%

Compute the total asset turnover.

(4)	Total Asset Turnover
	Choose Numerator:	/	Choose Denominator:	=	Total Asset Turnover
		/		=	Total asset turnover
		/		=	0	times

Compute the return on total assets.

(5)	Return on Total Assets
	Choose Numerator:	/	Choose Denominator:	=	Return on Total Assets
		/		=	Return on total assets
		/		=	0	%

Compute the return on common stockholders' equity.

(6)	Return on Common Stockholders' Equity
	Choose Numerator:	/	Choose Denominator	=	Return On Common Stockholders' Equity
		-		/		=	Return on common stockholders' equity
		-		/		=	0	%

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 6 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions