Question

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, $47,900; total assets, $199,400; common stock, $88,000; and retained earnings, $39,268.)

CABOT CORPORATION Income Statement For Current Year Ended December 31
Sales	$	449,600
Cost of goods sold		297,650
Gross profit		151,950
Operating expenses		98,900
Interest expense		4,600
Income before taxes		48,450
Income tax expense		19,518
Net income	$	28,932

CABOT CORPORATION Balance Sheet December 31
Assets				Liabilities and Equity
Cash	$	18,000		Accounts payable	$	15,500
Short-term investments		9,600		Accrued wages payable		4,200
Accounts receivable, net		30,400		Income taxes payable		4,200
Merchandise inventory		38,150		Long-term note payable, secured by mortgage on plant assets		70,400
Prepaid expenses		3,050		Common stock		88,000
Plant assets, net		151,300		Retained earnings		68,200
Total assets	$	250,500		Total liabilities and equity	$	250,500

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