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, $52,900; total assets, $209,400; common stock, $82,000; and retained earnings, $40,297.) CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 453,600 Cost of goods sold 297,650 Gross profit 155,950 Operating expenses 99,600 Interest expense 4,600 Income before taxes 51,750 Income tax expense 20,847 Net income $ 30,903 CABOT CORPORATION Balance Sheet December 31 Assets Liabilities and Equity Cash $ 18,000 Accounts payable $ 18,500 Short-term investments 8,400 Accrued wages payable 2,800 Accounts receivable, net 28,800 Income taxes payable 3,600 Merchandise inventory 32,150 Long-term note payable, secured by mortgage on plant assets 65,400 Prepaid expenses 2,850 Common stock 82,000 Plant assets, net 153,300 Retained earnings 71,200 Total assets $ 243,500 Total liabilities and equity $ 243,500 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.)

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 statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31 of the prior year were inventory, $52,900; total assets, $209,400; common stock, $82,000; and retained earnings, $40,297.)

CABOT CORPORATION Income Statement For Current Year Ended December 31
Sales	$	453,600
Cost of goods sold		297,650
Gross profit		155,950
Operating expenses		99,600
Interest expense		4,600
Income before taxes		51,750
Income tax expense		20,847
Net income	$	30,903

CABOT CORPORATION Balance Sheet December 31
Assets			Liabilities and Equity
Cash	$	18,000	Accounts payable	$	18,500
Short-term investments		8,400	Accrued wages payable		2,800
Accounts receivable, net		28,800	Income taxes payable		3,600
Merchandise inventory		32,150	Long-term note payable, secured by mortgage on plant assets		65,400
Prepaid expenses		2,850	Common stock		82,000
Plant assets, net		153,300	Retained earnings		71,200
Total assets	$	243,500	Total liabilities and equity	$	243,500

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.)

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, $52,900; total assets, $209,400; common stock, $82,000; and retained earnings,
$40,297.)
CABOT CORPORATION
Income Statement
For Current Year Ended December 31
Sales
$ 453,600
Cost of goods sold
Gross profit
Operating expenses
Interest expense
297,650
155,950
99,600
4,600
51,750
20,847
Income before taxes
Income tax expense
Net income
$4
30,903
CABOT CORPORATION
Balance Sheet
December 31
Liabilities and Equity
Assets
2$
18,000 Accounts payable
8,400 Accrued wages payable
Cash
18, 500
2,800
3,600
Short-term investments
Income taxes payable
Accounts receivable, net
Merchandise inventory
28,800
32,150 Long-term note payable, secured by
65,400
mortgage on plant assets
Prepaid expenses
2,850 Common stock
153,300 Retained earnings
82, 000
71, 200
Plant assets, net
Total assets
$ 243,500 Total liabilities and equity
$ 243,500
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.)
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