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, 2016, were inventory, $46,900; total assets, $219,400; common stock, $87,000; and retained earnings, $41,551.) CABOT CORPORATION Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes Income taxes Net income $ 456,600 297,050 159,550 98,600 4,100 56,850 22,901 $ 33,949

Explanation / Answer

7 Times Interest Earned Choose Numerator: / Choose Denominator: = Times Interest Earned Income before tax + Interest expense / Interest expense = Times Interest Earned 2017 56850 + 4100 / 4100 = 14.9 times 8 Profit Margin Ratio Choose Numerator: / Choose Denominator: = Profit margin ratio Net income / Net sales = Profit margin ratio 2017 33949 / 456600 = 7.4% 9 Total Asset Turnover Choose Numerator: / Choose Denominator: = Total Asset Turnover Net sales / Average total assets = Total Asset Turnover 2017 456600 / 236100 = 1.9 times

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