Selected current year-end financial statements of Cabot
Corporation follow. (All sales were on credit; selected balance...
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, $55,900; total assets, $229,400; common stock, $84,000;
and retained earnings, $46,084.)
CABOT CORPORATION
Income Statement
For Current Year Ended December 31
Sales
$
450,600
Cost of goods sold
297,150
Gross profit
153,450
Operating expenses
98,500
Interest expense
4,100
Income before taxes
50,850
Income tax expense
20,484
Net income
$
30,366
CABOT CORPORATION
Balance Sheet
December 31
Assets
Liabilities and Equity
Cash
$
18,000
Accounts payable
$
17,500
Short-term investments
9,600
Accrued wages payable
2,800
Accounts receivable, net
30,800
Income taxes payable
3,300
Merchandise inventory
34,150
Long-term note payable, secured by mortgage on plant
assets
63,400
Prepaid expenses
2,600
Common stock
84,000
Plant assets, net
152,300
Retained earnings
76,450
Total assets
$
247,450
Total liabilities and equity
$
247,450
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.)
Solutions
Expert Solution
(1)
Current Ratio
Choose
Numerator:
/
Choose
Denominator:
=
Current
Ratio
Current assets
/
Current liabilities
=
Current Ratio
$95150
/
$23600
=
4.0
to 1
Current Assets = Total assets – Plant assets
=
$247450 - $152300 = $95150
Current liabilities = Accounts payable + accrued wages payable +
Income tax payable
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, $199,400; common stock, $86,000;
and retained earnings, $30,301.)
CABOT CORPORATION
Income Statement
For Current Year Ended December 31
Sales
$
455,600
Cost of goods sold
298,150
Gross profit
157,450
Operating expenses
99,200
Interest expense
5,000
Income before taxes
53,250
Income tax expense
21,451
Net income
$
31,799
CABOT CORPORATION
Balance...
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,
$55,900; total assets, $239,400; common stock, $88,000; and
retained earnings, $31,255.) CABOT CORPORATION Income Statement For
Current Year Ended December 31 Sales $ 453,600 Cost of goods sold
298,450 Gross profit 155,150 Operating expenses 99,500 Interest
expense 4,500 Income before taxes 51,150 Income tax expense 20,605
Net income $ 30,545 CABOT CORPORATION Balance...
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, $46,900; total assets, $219,400; common stock, $82,000;
and retained earnings, $40,334.)
CABOT CORPORATION
Income Statement
For Current Year Ended December 31
Sales
$
451,600
Cost of goods sold
296,950
Gross profit
154,650
Operating expenses
99,200
Interest expense
4,600
Income before taxes
50,850
Income tax expense
20,484
Net income
$
30,366
CABOT CORPORATION
Balance...
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...
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, $34,224.)
CABOT CORPORATION
Income Statement
For Current Year Ended December 31
Sales
$
454,600
Cost of goods sold
297,850
Gross profit
156,750
Operating expenses
98,500
Interest expense
4,200
Income before taxes
54,050
Income tax expense
21,774
Net income
$
32,276
CABOT CORPORATION
Balance...
Selected year-end financial statements of Cabot Corporation
follow. (All sales were on credit; selected balance sheet amounts
at December 31, 2016, were inventory, $51,900; total assets,
$189,400; common stock, $87,000; and retained earnings,
$37,214.)
CABOT CORPORATION
Income Statement
For Year Ended December 31, 2017
Sales
$451,600
Cost of goods sold
297,450
Gross profit
154,150
Operating expenses
99,500
Interest expense
4,100
Income before taxes
50,550
Income taxes
20,364
Net income
$30,186
CABOT CORPORATION
Balance Sheet
December 31, 2017
Assets
Liabilities and...
Selected year-end financial statements of Cabot Corporation
follow. (All sales were on credit; selected balance sheet amounts
at December 31, 2016, were inventory, $47,900; total assets,
$169,400; common stock, $82,000; and retained earnings,
$56,657.)
CABOT CORPORATION
Income Statement
For Year Ended December 31, 2017
Sales
$
452,600
Cost of goods sold
297,250
Gross profit
155,350
Operating expenses
98,700
Interest expense
5,000
Income before taxes
51,650
Income taxes
20,807
Net income
$
30,843
CABOT CORPORATION
Balance Sheet
December 31, 2017
Assets...
Selected year-end financial statements of Cabot Corporation
follow. (All sales were on credit; selected balance sheet amounts
at December 31, 2016, were inventory, $54,900; total assets,
$249,400; common stock, $83,000; and retained earnings,
$37,776.)
CABOT CORPORATION
Income Statement
For Year Ended December 31, 2017
Sales
$
455,600
Cost of goods sold
297,350
Gross profit
158,250
Operating expenses
99,100
Interest expense
4,100
Income before taxes
55,050
Income taxes
22,176
Net income
$
32,874
CABOT CORPORATION
Balance Sheet
December 31, 2017
Assets...
Selected year-end financial statements of Cabot Corporation
follow. (All sales were on credit; selected balance sheet amounts
at December 31, 2016, were inventory, $55,900; total assets,
$219,400; common stock, $85,000; and retained earnings,
$42,307.)
CABOT CORPORATION
Income Statement
For Year Ended December 31, 2017
Sales
$
455,600
Cost of goods sold
297,250
Gross profit
158,350
Operating expenses
99,100
Interest expense
4,000
Income before taxes
55,250
Income taxes
22,257
Net income
$
32,993
CABOT CORPORATION
Balance Sheet
December 31, 2017
Assets...
Selected year-end financial statements of Cabot Corporation
follow. (All sales were on credit; selected balance sheet amounts
at December 31, 2016, were inventory, $48,900; total assets,
$189,400; common stock, $90,000; and retained earnings, $22,748.)
CABOT CORPORATION Income Statement For Year Ended December 31, 2017
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 taxes 19,598 Net income $ 29,052 CABOT
CORPORATION Balance Sheet December 31, 2017 Assets...