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, $53,900, total assets, $189,400; common stock, $83,000, and retained eamings, $40,847.) T CORPORATI Income Statement For Year Ended December 31, 2015 Sales 448,600 296,950 Cost of goods sold Gross proft Operating expenses Interest expense 151,650 99,500 4,000 Income before taxes Income taxes 48,150 19,397 Net income s 28,753 CABOT CORPORATION Balance Sheet December 31, 2015 Assets Cash s 12,000 9,400 31,400 6,000 40,150 2,550 148,300 Liabilities and Equity Accounts payable Accrued wages payable Income taxes payable Long-term note payable, secured S 19,500 4,400 2,900 Accounts receivable, net Notes receivable (trade) Merchandise inventory Prepaid expenses Plant assets, net 70,400 83,000 69,600 by mortgage on plant assets Common stock Retained eamings Total assets 249,800 Total liabilities and equity 249,800 These are short-term notes receivable arising from customer (trade) sales cemuutd he olowing (1) current ratio. (2) acid-test ratio, (3) days' sales uncolected, (4) inventory Required: turnover, (5) days sales in inventory. (6) debt-to-equity ratio. (7) tim earned, (8) profit margin O Ask me anything

Explanation / Answer

(1) Current Ratio Choose Numerator / Choose Denonminator = Current Ratio Cash            12,000 Accounts Payable      19,500 Short term Investments              9,400 Accrued Wages Payable         4,400 Current Assets / Current Liabilities = Current Ratio Accounts receivable (Net)            31,400 Income Taxes Payable         2,900 2015                               101,500 /                                     26,800 =                         3.79 to 1 Notes receivable (Trade)              6,000 Total Current Liabilities      26,800 Merchandise Inventory            40,150 Prepaid Expenses              2,550 Total Current assets          101,500 (2) Acid Test Ratio Cash            12,000 Choose Numerator / Choose Denonminator = Current Ratio Short term Investments              9,400 Accounts receivable (Net)            31,400 Quick Assets / Current Liabilities = Current Ratio Notes receivable (Trade)              6,000 2015                                 58,800 /                                     26,800 =                         2.19 to 1 Total Quick Assets            58,800 (3) Days Sales Uncollected Choose Numerator / Choose Denonminator X Days = Days Sales Uncollected Accounts receivable / Net Credit Sales X 365 = Days Sales Uncollected 2015                                 31,400 /                                   448,600 X                           365 =                      25.55 days (4) Inventory Turnover Choose Numerator / Choose Denonminator = Inventory Turnover Cost of Goods Sold / Average Inventory = Inventory Turnover 2015                               296,950 /                                     40,150 =                         7.40 times

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.