Question

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, 2017Assets   Liabilities and Equity   Cash$18,000 Accounts payable$16,500 Short-term investments 9,400 Accrued wages payable 4,800 Accounts receivable, net 30,400 Income taxes payable 4,100 Notes receivable (trade)* 4,000     Merchandise inventory 36,150 Long-term note payable, secured by mortgage on plant assets 64,400 Prepaid expenses 2,850 Common stock 85,000 Plant assets, net 149,300 Retained earnings 75,300 Total assets$250,100 Total liabilities and equity$250,100

CABOT CORPORATION Balance Sheet December 31, 2017
Assets				Liabilities and Equity
Cash	$	18,000		Accounts payable	$	16,500
Short-term investments		9,400		Accrued wages payable		4,800
Accounts receivable, net		30,400		Income taxes payable		4,100
Notes receivable (trade)*		4,000
Merchandise inventory		36,150		Long-term note payable, secured by mortgage on plant assets		64,400
Prepaid expenses		2,850		Common stock		85,000
Plant assets, net		149,300		Retained earnings		75,300
Total assets	$	250,100		Total liabilities and equity	$	250,100

* These are short-term notes receivable arising from customer (trade) sales.

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.)

Compute the debt-to-equity ratio.

Compute the debt-to-equity ratio.

	(6) Debt-to-Equity Ratio Choose Numerator: / Choose Denominator: = Debt-to-Equity Ratio / = Debt-to-equity ratio 2017: / = to 1

Compute the times interest earned.

	(7) Times Interest Earned Choose Numerator: / Choose Denominator: = Times Interest Earned + / = Times interest earned 2017: + / = times

• Compute the profit margin ratio

  (8) Profit Margin Ratio Choose Numerator: / Choose Denominator: = Profit margin ratio / = Profit margin ratio 2017: / = %

• 	(9) Total Asset Turnover Choose Numerator: / Choose Denominator: = Total Asset Turnover / = Total asset turnover 2017: / = times

• Compute the return on total assets.

  	(10) Return on Total Assets Choose Numerator: / Choose Denominator: = Return on Total Assets / = Return on total assets 2017: / = %

• 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 2017: - / = %

Answer 1