Selected current year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amountsat December 31 of the prior year were inventory, $52,900; total assets, $219,400; common stock, $86,000; and retained earnings,$31,757.)AssetsCashShort-term investmentsAccounts receivable, netMerchandise inventory.Prepaid expensesPlant assets, netTotal assetsCABOT CORPORATIONIncome StatementFor Current Year Ended December 31SalesCost of goods soldGross profit$ 14,0008,20030,00038,1502,600149,300$ 242, 250Operating expensesInterest expenseIncome before taxesIncome tax expenseNet income$ 456,600297,750158,85099,0004,60055,25022,257$32,993CABOT CORPORATIONBalance SheetDecember 31 of current yearLiabilities and EquityAccounts payableAccrued wages payableIncome taxes payableLong-term note payable, secured by mortgage on plant assetsCommon stockRetained earningsTotal liabilities and equity$ 18,5003,6004,00065,40086,00064,750$ 242,250Required: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.) 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) returnon equity. (Do not round intermediate calculations.)Complete this question by entering your answers in the tabs below.Req 1 and 2 Req 3(1)Compute the current ratio and acid-test ratio.(2)Numerator:Req 4Numerator:I11Req 5/1Req 6Current RatioDenominator:Acid-Test RatioDenominator:Req 7=II=||=Req 8Req 9Current RatioCurrent ratioto 1Acid-Test RatioAcid-Test Ratioto 1Req 10Req 11

"Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for you. To get remaining sub-parts solved, please repost the complete question and mention the sub-parts to be solved." The ratio analysis is quantitative method which is used by business to measure the company's liquidity, efficiency, profitability, etc. The current ratio and quick ratios are the important liquidity ratios. Part (1). Current ratio Numerator / Denominator = Current ratio Current assets / Current liabilities Current ratio $92,950 / $26,100 = 3.6 to 1 Part 2. Acid test ratio Numerator / Denominator = Acid test Ratio Quick assets / Current liabilities Acid test Ratio $52,200 / $26,100 = 2to 1 Part 3. Account receivables = $30,000 Sales = $456,600 Days sales uncollected = (Account receivables / Sales) * 365 = (30,000/456,600) * 365 = 24 daysCurrent assets = Cash + short term investments + accounts receivables + Merchandise inventory + Prepaid expenses = 14,000 + 8,200 + 30,000 + 38,150 + 2,600 = $92,950 Quick assets = Cash + short term investments + accounts receivables = 14,000 + 8,200 + 30,000 = $52,200 Current liabilities = Accounts payable + Accrued wages payable + Income taxes payable = 18,500 + 3,600 + 4,000 = $26,100

Business

Accounting

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, $219,400; common stock, $86,000; and retained earnings, $31,757.) 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 Cost of goods sold Gnorr ppofit Accounts payable $ 14,000 8,200 Accrued wages payable 30,000 Income taxes payable 38,150 2,600 149,300 $ 242,250 CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity $ 456,600 297,750 158 850 Long-term note payable, secured by mortgage on plant assets Common stock Retained earnings Total liabilities and equity $ 18,500 3,600 4,000 65,400 86,000 64,750 $ 242,250

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, $219,400; common stock, $86,000; and retained earnings, $31,757.) 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 Cost of goods sold Gnorr ppofit Accounts payable $ 14,000 8,200 Accrued wages payable 30,000 Income taxes payable 38,150 2,600 149,300 $ 242,250 CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity $ 456,600 297,750 158 850 Long-term note payable, secured by mortgage on plant assets Common stock Retained earnings Total liabilities and equity $ 18,500 3,600 4,000 65,400 86,000 64,750 $ 242,250

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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