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, $47,900; total assets, $229,400; common stock, $86,000; and retained earnings, $36,061.) Assets Cash Short-term investments Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Sales Cost of goods sold Gross profit $ 14,000 8,000 31,600 CABOT CORPORATION Income Statement For Current Year Ended December 31 Operating expenses Interest expense Income before taxes Income tax expense Net income 36,150 2,900 149,300 Retained earnings $241,950 Total liabilities and equity $ 450,600 297,650 152,950 99,100 4,300 CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity Accounts payable Accrued wages payable Income taxes payable 49,550 19,961 $29,589 Long-term note payable, secured by mortgage on plant assets Common stock $ 17,500 4,200 3,200 65,400 86,000 65,650 $ 241,950 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.
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, $47,900; total assets, $229,400; common stock, $86,000; and retained earnings, $36,061.) Assets Cash Short-term investments Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Sales Cost of goods sold Gross profit $ 14,000 8,000 31,600 CABOT CORPORATION Income Statement For Current Year Ended December 31 Operating expenses Interest expense Income before taxes Income tax expense Net income 36,150 2,900 149,300 Retained earnings $241,950 Total liabilities and equity $ 450,600 297,650 152,950 99,100 4,300 CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity Accounts payable Accrued wages payable Income taxes payable 49,550 19,961 $29,589 Long-term note payable, secured by mortgage on plant assets Common stock $ 17,500 4,200 3,200 65,400 86,000 65,650 $ 241,950 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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4,5,6
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, $47,900; total assets, $229,400; common stock, $86,000; and retained earnings,
$36,061.)
Assets
Cash
Short-term investments
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Plant assets, net
Total assets
$ 14,000
8,000
31,600
Operating expenses
Interest expense
Income before taxes
Income tax expense
Net income
CABOT CORPORATION
Income Statement
For Current Year Ended December 31
Sales
Cost of goods sold
Gross profit
CABOT CORPORATION
Balance Sheet
December 31 of current year
Liabilities and Equity
$ 450,600
297,650
152,950
99, 100
4,300
49,550
19,961
$ 29,589
Accounts payable
Accrued wages payable
Income taxes payable
36,150
2,900
149,300
$ 241,950 Total liabilities and equity
Long-term note payable, secured by mortgage on plant assets
Common stock
Retained earnings
$ 17,500
4,200
3,200
65,400
86,000
65,650
$ 241,950
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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