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, $54,900; total assets, $179,400; common stock, $87,000; and retained earnings, $30,193.)

CABOT CORPORATION Income Statement For Current Year Ended December 31
Sales	$	451,600
Cost of goods sold		298,150
Gross profit		153,450
Operating expenses		98,900
Interest expense		4,300
Income before taxes		50,250
Income tax expense		20,243
Net income	$	30,007

CABOT CORPORATION Balance Sheet December 31
Assets				Liabilities and Equity
Cash	$	14,000		Accounts payable	$	18,500
Short-term investments		8,200		Accrued wages payable		3,800
Accounts receivable, net		29,400		Income taxes payable		3,300
Merchandise inventory		36,150		Long-term note payable, secured by mortgage on plant assets		69,400
Prepaid expenses		3,150		Common stock		87,000
Plant assets, net		151,300		Retained earnings		60,200
Total assets	$	242,200		Total liabilities and equity	$	242,200

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