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Problem 13-4A Calculating financial statement ratios LO P3 Selected current year-end financial statements of Cabot Corporation...

Problem 13-4A Calculating financial statement ratios LO P3 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, $50,900; total assets, $169,400; common stock, $84,000; and retained earnings, $31,305.) CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 455,600 Cost of goods sold 297,350 Gross profit 158,250 Operating expenses 98,800 Interest expense 4,700 Income before taxes 54,750 Income tax expense 22,055 Net income $ 32,695 CABOT CORPORATION Balance Sheet December 31 Assets Liabilities and Equity Cash $ 18,000 Accounts payable $ 16,500 Short-term investments 8,800 Accrued wages payable 4,400 Accounts receivable, net 32,000 Income taxes payable 4,800 Merchandise inventory 30,150 Long-term note payable, secured by mortgage on plant assets 72,400 Prepaid expenses 2,850 Common stock 84,000 Plant assets, net 154,300 Retained earnings 64,000 Total assets $ 246,100 Total liabilities and equity $ 246,100 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.)

please helppp meeee! thank you!

Solutions

Expert Solution

current ratio current assets / current liabilities
current assets: Amount ($)
cash 18000
short term investments 8800
accounts receivable 32000
merchandise inventory 30150
prepaid expenses 2850
total current assets 91800
current liabilties:
accounts payable 16500
accrued wages payable 4400
income tax payable 4800
total current liabilities 25700
ratio 3.572
acid test ratio acid assets / current liabilities
acid assets: Amount ($)
cash 18000
short term investments 8800
accounts receivable 32000
total acid assets 58800
current liabilties:
accounts payable 16500
accrued wages payable 4400
income tax payable 4800
total current liabilities 25700
ratio 2.287937743
days sales uncollected (accounts receivable / net sales)*365
Amount ($)
accounts receivable 32000
net sales 455600
ratio (in days) 25.63652327
inventory turnover cost of goods sold / average inventories
Amount ($)
cost of goods sold 297350
opening inventories 50900
closing inventories 30150
average inventories 40525
ratio 7.337446021
days sales in inventory 365 days / inventory turnover
inventory turnover 7.337446021
ratio (in days) 49.74482933
debt-to-equity ratio total liabilities / total equity
Amount ($)
total liabilities:
accounts payable 16500
accrued wages 4400
income tax payable 4800
note payable 72400
total liabilities 98100
total equity
common stock 84000
retained earnings 64000
total equity 148000
ratio 0.662837838
times interest earned earnings before interest and tax / interest expense
Amount ($)
sales 455600
cost of goods sold -297350
gross profit 158250
operating expenses -98800
operating income 59450
interest expenses 4700
ratio 12.64893617

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