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CABOT CORPORATION Balance Sheet December 31 Assets Liabilities and Equity Cash $ 12,000 Accounts payable $...

CABOT CORPORATION
Balance Sheet
December 31
Assets Liabilities and Equity
Cash $ 12,000 Accounts payable $ 16,500
Short-term investments 9,600 Accrued wages payable 3,800
Accounts receivable, net 32,800 Income taxes payable 3,900
Merchandise inventory 38,150 Long-term note payable, secured by mortgage on plant assets 70,400
Prepaid expenses 2,550 Common stock 89,000
Plant assets, net 150,300 Retained earnings 61,800
Total assets $ 245,400 Total liabilities and equity $ 245,400


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 assets = cash + short term investment + accounts receivable + merchandise inventory + prepaid expenses

= $12000 + $9600 + $32800 + $38150 + $2550 = $95100

Current liabilities = accounts payable + accrued wages payable + income taxes payable

= $16500 + $3800 + $3900 = $24200

current ratio = current assets/current liabilities

= $95100/$24200

= 3.93 times

(2)

acid test ratio = (cash + short term investment + accounts receivable)/current liabilities

= ($12000 + $9600 + $32800)/$24200

= 2.25 times

(3)

sales information is missing, however I leave the formula below,

days sales uncollected = (accounts receivable/net credit sales) x 365

(4)

inventory information is missing, however I leave the formula below,

Inventory turnover = cost of goods sold/average inventory

(5)

inventory information is missing, however I leave the formula below,

days sales in inventory = 365/inventory turnover

(6)

total liabilities = Accounts Payable + accrued wages payable + income taxes payable + long-term note payable

= $16500 + $3800 + $3900 + $70400 = $94600

total stockholders equity = common stock + retained earnings

= $89000 + $61800 = $150800

debt to equity ratio = total liabilities/total stockholders equity

= $94600/$150800

= 0.63 or 62.73%

(7)

information is missing

times interest earned = earning before interest and taxes/interest expense

(8)

Information is missing

profit margin ratio = net income/sales

(9)

information is missing

total assets turnover = sales/average total assets

(10)

information is missing

return on total assets = earnings before interest and taxes/average total assets

(11)

information is missing

return on common stockholders equity = net income/average common stockholders equity

ekkarill92 answered 1 year ago
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