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, $249,400; common stock, $89,000; and retained earnings, $31,607.) CABOT CORPORATION Balance Sheet December 31 of current year Assets Liabilities and Equity Cash $ 10,000 Accounts payable $ 16,500 Short-term investments 9,400 Accrued wages payable 3,600 Accounts receivable, net 30,000 Income taxes payable 3,400 Merchandise inventory 40,150 Long-term note payable, secured by mortgage on plant assets 70,400 Prepaid expenses 2,500 Common stock 89,000 Plant assets, net 153,300 Retained earnings 62,450 Total assets $ 245,350 Total liabilities and equity $ 245,350 CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 452,600 Cost of goods sold 298,050 Gross profit 154,550 Operating expenses 98,800 Interest expense 4,100 Income before taxes 51,650 Income tax expense 20,807 Net income $ 30,843 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. Note: Do not round intermediate calculations.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 50E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...

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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, $249,400; common stock, $89,000; and retained earnings, $31,607.) CABOT CORPORATION Balance Sheet December 31 of current year Assets Liabilities and Equity Cash $ 10,000 Accounts payable $ 16,500 Short-term investments 9,400 Accrued wages payable 3,600 Accounts receivable, net 30,000 Income taxes payable 3,400 Merchandise inventory 40,150 Long-term note payable, secured by mortgage on plant assets 70,400 Prepaid expenses 2,500 Common stock 89,000 Plant assets, net 153,300 Retained earnings 62,450 Total assets $ 245,350 Total liabilities and equity $ 245,350 CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 452,600 Cost of goods sold 298,050 Gross profit 154,550 Operating expenses 98,800 Interest expense 4,100 Income before taxes 51,650 Income tax expense 20,807 Net income $ 30,843 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. Note: Do not round intermediate calculations.

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