Question

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, $47,900; total assets, $179,400; common stock, $81,000; and retained earnings, $51,347.)

CABOT CORPORATION Income Statement For Current Year Ended December 31
Sales	$	449,600
Cost of goods sold		298,150
Gross profit		151,450
Operating expenses		98,800
Interest expense		4,500
Income before taxes		48,150
Income tax expense		19,397
Net income	$	28,753

CABOT CORPORATION Balance Sheet December 31
Assets				Liabilities and Equity
Cash	$	22,000		Accounts payable	$	16,500
Short-term investments		8,400		Accrued wages payable		3,200
Accounts receivable, net		32,000		Income taxes payable		3,700
Merchandise inventory		32,150		Long-term note payable, secured by mortgage on plant assets		66,400
Prepaid expenses		3,050		Common stock		81,000
Plant assets, net		153,300		Retained earnings		80,100
Total assets	$	250,900		Total liabilities and equity	$	250,900

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.)

Answer 1

Current Ratio	=Current Assets/ Curremt Liabilities
Cash	22,000	Accoutns Payble	16500
Short Ter Inv	8,400	Accrued Wages Payble	3200
A/C Recvb	32,000	IT payble	3700
Inventory	32,150		23400
Prepaid Exp	3,050
Total Current Assets	97,600
Curret Ratio =	4.17
Acid Test Ratio	= Quick Assets/Current Liabilities
Quick assets	=Cash+Short term inv+ac receivable
	62,400
Acid Test Ratio	2.67
Days Sales Uncollected	Accounts receiable/NET SALES * 365
	25.98
Inventory Turnover Ratio	=Cost Of Goods Sold/Average Inventory
	7.45
Days Sale in Inventory	=Closing Inventory/ COGS*365
	39.36
Debt To Equity Ratio	=Debt / Equity
	0.41
Times Interest Earned	=Earning before intt & tax / Intt amount
	11.7
Profit Margin Ratio	=Net Profit/Sales
	6.40%
Total Asset Turnover	=Sales/ Average Total Assets
	1.35
Return On Total Assets	=Net Profit/Average Total Assets
	8.64%
Return On shareholders Equity	=Net Profit/Average sahre holders equity
	39.19%