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, $49,900; total assets, $249,400; common stock, $88,000; and retained earnings, $25,647.) CABOT CORPORATIONIncome StatementFor Current Year Ended December 31 Sales $ 456,600 Cost of goods sold 297,950 Gross profit 158,650 Operating expenses 98,900 Interest expense 4,400 Income before taxes 55,350 Income tax expense 22,297 Net income $ 33,053 CABOT CORPORATIONBalance SheetDecember 31 Assets Liabilities and Equity Cash $ 18,000 Accounts payable $ 19,500 Short-term investments 9,600 Accrued wages payable 3,600 Accounts receivable, net 30,000 Income taxes payable 4,700 Merchandise inventory 34,150 Long-term note payable, secured by mortgage on plant assets 71,400 Prepaid expenses 2,850 Common stock 88,000 Plant assets, net 151,300 Retained earnings 58,700 Total assets $ 245,900 Total liabilities and equity $ 245,900 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, $49,900; total assets, $249,400; common stock, $88,000; and retained earnings, $25,647.)

CABOT CORPORATION Income Statement For Current Year Ended December 31
Sales	$	456,600
Cost of goods sold		297,950
Gross profit		158,650
Operating expenses		98,900
Interest expense		4,400
Income before taxes		55,350
Income tax expense		22,297
Net income	$	33,053

CABOT CORPORATION Balance Sheet December 31
Assets			Liabilities and Equity
Cash	$	18,000	Accounts payable	$	19,500
Short-term investments		9,600	Accrued wages payable		3,600
Accounts receivable, net		30,000	Income taxes payable		4,700
Merchandise inventory		34,150	Long-term note payable, secured by mortgage on plant assets		71,400
Prepaid expenses		2,850	Common stock		88,000
Plant assets, net		151,300	Retained earnings		58,700
Total assets	$	245,900	Total liabilities and equity	$	245,900

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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