Selected year-end financial statements of Cabot Corporation follow. (All sales w

Question

Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2014, were inventory, $52,900; total assets, $169,400; common stock, $86,000; and retained earnings, $41,200.)

ezto.mheducation.com 6 value: 4.20 points Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit selected balance sheet amounts at December 31, 2014, were inventory, $52,900; total assets, $169,400; common stock, $86,000; and retained earnings, $41,200.) CABOT CORPORATION Income Statement For Year Ended December 31, 2015 Sales Cost of goods sold $ 449,600 297,550 Gross profit Operating expenses Interest expense 152,050 98,500 4,400 Income before taxe Income taxes 49,150 19,800 Net income $ 29,350 CABOT CORPORATION Balance Sheet December 31, 2015 Assets Cash Short-term investments Accounts receivable, net Notes receivable (trade)* Merchandise inventory Prepaid expenses Plant assets, net Liabilities and Equity Accounts payable Accrued wages payable Income taxes payable Long-term note payable, secured $ 16,500 3,600 4,200 $ 18,000 9,000 32,000 4,000 34,150 2,800 152,300 by mortgage on plant assets Common stock 71,400 86,000 70,550 Retained eamings Total assets $ 252,250 Total liabilities and equity $ 252,250 "These are short-term notes receivable arising from customer (trade) sales. 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.) urrent Rat re Choose Numerator: 1 Choose Denominator: -Current Ratio

Explanation / Answer

Current ratio current asset / current liabilities $99950/$24300 4.11 acid test ratio (current asset - inventory-prepaid expenses)/ current liabilities $(99950-34150-2800)/$24300 2.59 Days sales uncollected (Current receivables / net credit sales )x 365 days (32000 / 449600) x365 days 25.98 days Inventory turnover cost of goods sold / average inventory 297550/((52900+34150)/2) 6.84 The debt to equity ratio Total liabilities/total equity (3600+4200+4200+71400)/(86000+70550) 0.53 Times interest earned ratio Net Operating profit / interest (152050-98500) / 4400 12.17 profit margin Net income / net sales $29350/$449600 6.53% The total asset turnover. Net sales / average total assets 449600/((169400+252250)/2) 2.13 The return on total assets. Net Income / Average total Assets 29350/((169400+252250)/2) 0.14 The return on equity Net Income/Average Stcok holders' equity 29350/((127200+156550)/2) 0.21

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