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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

Transcribed Image Text: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
Gross profit
$ 14,000
8,200
30,000
38,150
2,600
149,300
$ 242, 250
Operating expenses
Interest expense
Income before taxes
Income tax expense
Net income
$ 456,600
297,750
158,850
99,000
4,600
55,250
22,257
$32,993
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
Total liabilities and equity
$ 18,500
3,600
4,000
65,400
86,000
64,750
$ 242,250
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.)

Transcribed Image Text: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.)
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 4
Numerator:
I
1
1
Req 5
/
1
Req 6
Current Ratio
Denominator:
Acid-Test Ratio
Denominator:
Req 7
=
II
=
||
=
Req 8
Req 9
Current Ratio
Current ratio
to 1
Acid-Test Ratio
Acid-Test Ratio
to 1
Req 10
Req 11
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