value: 35.00 points Selected year-end financial statements of Cabot Corporation
ID: 2501787 • Letter: V
Question
value: 35.00 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, $53,900; total assets, $189,400; common stock, $82,000; and retained earnings, $31,508.) CABOT CORPORATION Income Statement For Year Ended December 31, 2015 Sales Cost of goods sold $452,600 296,850 Gross profit Operating expenses Interest expense 155,750 98.800 4.800 Income before taxes Income taxes 52.150 21,008 Net income $ 31,142 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 $ 19,500 4.400 3,100 $ 10,000 8,800 29,600 3,500 38,150 2,700 150,300 by mortgage on plant assets Common stock Retained earnings 71,400 82,000 62,650 Total assets $243,050 Total liabilities and equity $243,050Explanation / Answer
1
Calculation of Current Ratio:
Cash
$ 10,000
Short term investments
$ 8,800
Accounts Receivables
$ 29,600
Notes Receivables
$ 3,500
Merchandise Inventory
$ 38,150
Prepaid expenses
$ 2,700
Total Current Assets (A)
$ 92,750
Accounts Payable
$ 19,500
Accrued wages payable
$ 4,400
Income tax payable
$ 3,100
Total Current Liabilities (B)
$ 27,000
Current Ratio = A/B
3.44
Formula :
Current Ratio =Total Current Assets / Total Current Liabilities
2
Calculation of Acid test Ratio:
Cash
$ 10,000
Short term investments
$ 8,800
Accounts Receivables
$ 29,600
Notes Receivables
$ 3,500
Total Quick Assets (A)
$ 51,900
Accounts Payable
$ 19,500
Accrued wages payable
$ 4,400
Income tax payable
$ 3,100
Total Current Liabilities (B)
$ 27,000
Acid Test Ratio = A/B
1.92
Formula :
Acid test Ratio =Total Quick Assets / Total Current Liabilities
3
Calculation of Days Sales uncollected:
Accounts Receivables
$ 29,600
Net Credit Sales
$ 452,600
Days Sales uncollected = (Accounts Receivables / Net Credit Sales) * 365
23.87
= (29600 / 452600)*365
4
Calculation of Inventory turnover:
Cost of Goods sold
$ 296,850
Average inventory (53900+38150)/2
$ 46,025
Inventory turnover = Cost of Goods sold / Average inventory
6.45
= 296850 / 46025
1
Calculation of Current Ratio:
Cash
$ 10,000
Short term investments
$ 8,800
Accounts Receivables
$ 29,600
Notes Receivables
$ 3,500
Merchandise Inventory
$ 38,150
Prepaid expenses
$ 2,700
Total Current Assets (A)
$ 92,750
Accounts Payable
$ 19,500
Accrued wages payable
$ 4,400
Income tax payable
$ 3,100
Total Current Liabilities (B)
$ 27,000
Current Ratio = A/B
3.44
Formula :
Current Ratio =Total Current Assets / Total Current Liabilities
2
Calculation of Acid test Ratio:
Cash
$ 10,000
Short term investments
$ 8,800
Accounts Receivables
$ 29,600
Notes Receivables
$ 3,500
Total Quick Assets (A)
$ 51,900
Accounts Payable
$ 19,500
Accrued wages payable
$ 4,400
Income tax payable
$ 3,100
Total Current Liabilities (B)
$ 27,000
Acid Test Ratio = A/B
1.92
Formula :
Acid test Ratio =Total Quick Assets / Total Current Liabilities
3
Calculation of Days Sales uncollected:
Accounts Receivables
$ 29,600
Net Credit Sales
$ 452,600
Days Sales uncollected = (Accounts Receivables / Net Credit Sales) * 365
23.87
= (29600 / 452600)*365
4
Calculation of Inventory turnover:
Cost of Goods sold
$ 296,850
Average inventory (53900+38150)/2
$ 46,025
Inventory turnover = Cost of Goods sold / Average inventory
6.45
= 296850 / 46025
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