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, $48,900; total assets, $189,400; common stock, $90,000; and retained earnings, $33,748.) CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 448,600 Cost of goods sold 297,250 Gross profit 151,350 Operating expenses 98,600 Interest expense 4,100 Income before taxes 48,650 Income tax expense 19,598 Net income $ 29,052 CABOT CORPORATION Balance Sheet December 31 Assets Liabilities and Equity Cash $ 10,000 Accounts payable $ 17,500 Short-term investments 8,400 Accrued wages payable 3,200 Accounts receivable, net 33,700 Income taxes payable 3,300 Merchandise inventory 32,150 Long-term note payable, secured by mortgage on plant assets 63,400 Prepaid expenses 2,650 Common stock 90,000 Plant assets, net 153,300 Retained earnings 62,800 Total assets $ 240,200 Total liabilities and equity $ 240,200 Required: Compute the following: (1) current ratio, (2) acid-test ratio, (3) days' sales uncollected

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, $48,900; total assets, $189,400; common stock, $90,000; and retained earnings, $33,748.)

CABOT CORPORATION Income Statement For Current Year Ended December 31
Sales	$	448,600
Cost of goods sold		297,250
Gross profit		151,350
Operating expenses		98,600
Interest expense		4,100
Income before taxes		48,650
Income tax expense		19,598
Net income	$	29,052

CABOT CORPORATION Balance Sheet December 31
Assets			Liabilities and Equity
Cash	$	10,000	Accounts payable	$	17,500
Short-term investments		8,400	Accrued wages payable		3,200
Accounts receivable, net		33,700	Income taxes payable		3,300
Merchandise inventory		32,150	Long-term note payable, secured by mortgage on plant assets		63,400
Prepaid expenses		2,650	Common stock		90,000
Plant assets, net		153,300	Retained earnings		62,800
Total assets	$	240,200	Total liabilities and equity	$	240,200

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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