Selected year-end financial statements of Cabot Corporation follow. (All sales w
ID: 2483687 • Letter: S
Question
Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2012, were inventory, $55,900; total assets, $229,400; common stock, $90,000; and retained earnings, $52,748.)
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.(Use 365 days a year. Do not round intermediate calculations.)
Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2012, were inventory, $55,900; total assets, $229,400; common stock, $90,000; and retained earnings, $52,748.)
Explanation / Answer
Current ratio Current assets/Current Liabilities (14000+9600+33000+7000+40150+3050)/(26500+5000+4500) 2.97 Acid Test ratio Current assets-prepaid expenses-Inventory/Current Liabilities (14000+9600+33000+7000)/(26500+5000+4500) 1.77 Day sales Uncollected Accounts Receivable/Net sales*365 33000/450600*365 26.73 days Inventory turnover Ratio COGS/Avg Inventory 297650/((55900+40150)/2) 6.20 Debt to Equity ratio Total Debt/Total equity (26500+5000+4500+65400)/(90000+69700) 0.63 Times interest earned Operating Income/Interest (152950-99500)/4300 12.43 times Profit margin ratio Net Margin/Net sales *100 29350/450600*100 6.51 % Asset turnover Sales/Avg Assets 450600/((229400+261600)/2) 1.84 Return on total assets Net Income/Total assets*100 29350/261600*100 11.22 % Return on common stockholders’ equity Net Income/Avg Total stokholder Equity 29350/((90000+69700+90000+52748)/2) 19.41 % rounded off to two decimal
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