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, $199,400; common stock, $86,000; and retained earnings, $37,787.) CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 453,600 Cost of goods sold 297,750 Gross profit 155,850 Operating expenses 99,400 Interest expense 4,600 Income before taxes 51,850 Income tax expense 20,887 Net income $ 30,963 CABOT CORPORATION Balance Sheet December 31 Assets Liabilities and Equity Cash $ 20,000 Accounts payable $ 15,500 Short-term investments 8,200 Accrued wages payable 4,600 Accounts receivable, net 29,200 Income taxes payable 3,400 Merchandise inventory 36,150 Long-term note payable, secured by mortgage on plant assets 70,400 Prepaid expenses 2,800 Common stock 86,000 Plant assets, net 152,300 Retained earnings 68,750 Total assets $ 248,650 Total liabilities and equity $ 248,650 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.) Complete this question by entering your answers in the tabs below. Req 1 and 2 Compute the current ratio and acid-test ratio. (1) Current Ratio Choose Numerator: / Choose Denominator: = Current Ratio / = Current ratio / = to 1 (2) Acid-Test Ratio Choose Numerator: / Choose Denominator: = Acid-Test Ratio / = Acid-Test Ratio / = to 1 Req 3: Compute the days' sales uncollected. (3) Days' Sales Uncollected Choose Numerator: / Choose Denominator: x Days = Days Sales Uncollected / x = Days sales uncollected / x = days

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, $199,400; common stock, $86,000; and retained earnings, $37,787.) CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 453,600 Cost of goods sold 297,750 Gross profit 155,850 Operating expenses 99,400 Interest expense 4,600 Income before taxes 51,850 Income tax expense 20,887 Net income $ 30,963 CABOT CORPORATION Balance Sheet December 31 Assets Liabilities and Equity Cash $ 20,000 Accounts payable $ 15,500 Short-term investments 8,200 Accrued wages payable 4,600 Accounts receivable, net 29,200 Income taxes payable 3,400 Merchandise inventory 36,150 Long-term note payable, secured by mortgage on plant assets 70,400 Prepaid expenses 2,800 Common stock 86,000 Plant assets, net 152,300 Retained earnings 68,750 Total assets $ 248,650 Total liabilities and equity $ 248,650 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.) Complete this question by entering your answers in the tabs below. Req 1 and 2 Compute the current ratio and acid-test ratio. (1) Current Ratio Choose Numerator: / Choose Denominator: = Current Ratio / = Current ratio / = to 1 (2) Acid-Test Ratio Choose Numerator: / Choose Denominator: = Acid-Test Ratio / = Acid-Test Ratio / = to 1 Req 3: Compute the days' sales uncollected. (3) Days' Sales Uncollected Choose Numerator: / Choose Denominator: x Days = Days Sales Uncollected / x = Days sales uncollected / x = days

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 56P: The following selected information is taken from the financial statements of Arnn Company for its...

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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, $199,400; common stock, $86,000; and retained earnings, $37,787.)

CABOT CORPORATION Income Statement For Current Year Ended December 31
Sales	$	453,600
Cost of goods sold		297,750
Gross profit		155,850
Operating expenses		99,400
Interest expense		4,600
Income before taxes		51,850
Income tax expense		20,887
Net income	$	30,963

CABOT CORPORATION Balance Sheet December 31
Assets			Liabilities and Equity
Cash	$	20,000	Accounts payable	$	15,500
Short-term investments		8,200	Accrued wages payable		4,600
Accounts receivable, net		29,200	Income taxes payable		3,400
Merchandise inventory		36,150	Long-term note payable, secured by mortgage on plant assets		70,400
Prepaid expenses		2,800	Common stock		86,000
Plant assets, net		152,300	Retained earnings		68,750
Total assets	$	248,650	Total liabilities and equity	$	248,650

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.)

Complete this question by entering your answers in the tabs below.

Req 1 and 2

Compute the current ratio and acid-test ratio.

(1)	Current Ratio
	Choose Numerator:	/	Choose Denominator:	=	Current Ratio
		/		=	Current ratio
		/		=		to 1

(2)	Acid-Test Ratio
	Choose Numerator:	/	Choose Denominator:	=	Acid-Test Ratio
		/		=	Acid-Test Ratio
		/		=		to 1

Req 3: Compute the days' sales uncollected.

(3)	Days' Sales Uncollected
	Choose Numerator:	/	Choose Denominator:	x	Days	=	Days Sales Uncollected
		/		x		=	Days sales uncollected
		/		x		=		days

Req 4: Compute the inventory turnover.

(4)	Inventory Turnover
	Choose Numerator:	/	Choose Denominator:	=	Inventory Turnover
		/		=	Inventory turnover
		/		=		times

Compute the days' sales in inventory.

(5)	Days’ Sales in Inventory
	Choose Numerator:	/	Choose Denominator:	x	Days	=	Days’ Sales in Inventory
		/		x		=	Days’ sales in inventory
		/		x		=		days

Compute the debt-to-equity ratio.

(6)	Debt-to-Equity Ratio
	Choose Numerator:	/	Choose Denominator:	=	Debt-to-Equity Ratio
		/		=	Debt-to-equity ratio
		/		=		to 1

Compute the times interest earned.

(7)	Times Interest Earned
	Choose Numerator:	/	Choose Denominator:	=	Times Interest Earned
		+		/		=	Times interest earned
		+		/		=		times

Compute the profit margin ratio.

(8)	Profit Margin Ratio
	Choose Numerator:	/	Choose Denominator:	=	Profit margin ratio
		/		=	Profit margin ratio
		/		=		%

Compute the total asset turnover.

(9)	Total Asset Turnover
	Choose Numerator:	/	Choose Denominator:	=	Total Asset Turnover
		/		=	Total asset turnover
		/		=		times

Compute the return on total assets.

(10)	Return on Total Assets
	Choose Numerator:	/	Choose Denominator:	=	Return on Total Assets
		/		=	Return on total assets
		/		=		%

Compute the return on common stockholders' equity.

(11)	Return on Common Stockholders' Equity
	Choose Numerator:	/	Choose Denominator	=	Return On Common Stockholders' Equity
		-		/		=	Return on common stockholders' equity
		-		/		=		%

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