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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, $54,900; total assets, $189,400; common stock, $89,000; and retained earnings, $30,196.) 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 $ 451,600 Cost of goods sold 297,650 Gross profit Operating expenses Interest expense Income before taxes Income tax expense Net income $ 10,000 8,600 29,800 40,150 2,550 149,300 $ 240,400 Total liabilities and equity 153,950 98,900 3,800 CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity 51,250 20,646 $ 30,604 Accounts payable Accrued wages payable Income taxes payable Long-term note payable, secured by mortgage on plant assets Common stock Retained earnings $ 17,5 2,8 3,9 66,4 89,0 60,8 $ 240,4

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, $54,900; total assets, $189,400; common stock, $89,000; and retained earnings, $30,196.) 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 $ 451,600 Cost of goods sold 297,650 Gross profit Operating expenses Interest expense Income before taxes Income tax expense Net income $ 10,000 8,600 29,800 40,150 2,550 149,300 $ 240,400 Total liabilities and equity 153,950 98,900 3,800 CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity 51,250 20,646 $ 30,604 Accounts payable Accrued wages payable Income taxes payable Long-term note payable, secured by mortgage on plant assets Common stock Retained earnings $ 17,5 2,8 3,9 66,4 89,0 60,8 $ 240,4

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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, $54,900; total assets, $189,400; common stock, $89,000; and retained earnings, $30,196.) 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 $ 451,600 Cost of goods sold 297,650 Gross profit 153,950 98,900 3,800 Operating expenses Interest expense $ 10,000 8,600 29,800 40,150 2,550 149,300 $ 240,400 Income before taxes. Income tax expense Net income 51,250 20,646 $ 30,604 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 $ 17,5 2,8 3,9 66,4 89,0 60,8 $ 240,4
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, $54,900; total assets, $189,400; common stock, $89,000; and retained earnings, $30,196.) 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 $ 451,600 Cost of goods sold 297,650 Gross profit 153,950 98,900 3,800 Operating expenses Interest expense $ 10,000 8,600 29,800 40,150 2,550 149,300 $ 240,400 Income before taxes. Income tax expense Net income 51,250 20,646 $ 30,604 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 $ 17,5 2,8 3,9 66,4 89,0 60,8 $ 240,4
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: 1 1 1 Req 5 1 1 1 Req 6 Current Ratio Denominator: Acid-Test Ratio Denominator: < Req 1 and 2 Req 7 = = = = = Req 8 Req 9 Current Ratio Current ratio to 1 Acid-Test Ratio Acid-Test Ratio to 1 Req 3 > Req 10 Req 11
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: 1 1 1 Req 5 1 1 1 Req 6 Current Ratio Denominator: Acid-Test Ratio Denominator: < Req 1 and 2 Req 7 = = = = = Req 8 Req 9 Current Ratio Current ratio to 1 Acid-Test Ratio Acid-Test Ratio to 1 Req 3 > Req 10 Req 11
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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, $54,900; total assets, $189,400; common stock, $89,000; and retained earnings, $30,196.) 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 $ 451,600 297,650 Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes. Income tax expense Net income Req 1 and 2 (4) Req 3 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. Compute the inventory turnover. Req 4 Numerator: 153,950 98,900 3,800 51,250 20,646 $ 30,604 $ 10,000 8,600 29,800 40,150 2,550 149,300 $ 240,400 Total liabilities and equity CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity 1 1 1 Accounts payable Accrued wages payable Income taxes payable Long-term note payable, secured by mortgage on plant assets Common stock Retained earnings Req 5 Req 6 Inventory Turnover Denominator: < Req 3 Req 7 Req 8 Req 9 Inventory Turnover Inventory turnover 0 times Req 5 > Req 10 $ 17,500 2,800 3,900 66,400 89,000 60,800 $ 240,400 Req 11
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, $54,900; total assets, $189,400; common stock, $89,000; and retained earnings, $30,196.) 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 $ 451,600 297,650 Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes. Income tax expense Net income Req 1 and 2 (4) Req 3 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. Compute the inventory turnover. Req 4 Numerator: 153,950 98,900 3,800 51,250 20,646 $ 30,604 $ 10,000 8,600 29,800 40,150 2,550 149,300 $ 240,400 Total liabilities and equity CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity 1 1 1 Accounts payable Accrued wages payable Income taxes payable Long-term note payable, secured by mortgage on plant assets Common stock Retained earnings Req 5 Req 6 Inventory Turnover Denominator: < Req 3 Req 7 Req 8 Req 9 Inventory Turnover Inventory turnover 0 times Req 5 > Req 10 $ 17,500 2,800 3,900 66,400 89,000 60,800 $ 240,400 Req 11
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.)
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