Selected yearr end financial statements of Cabot Corporation follow, all sales w

Question

Selected yearr end financial statements of Cabot Corporation follow, all sales were on credit selected balanc sheet amunts at December 31, 2012 were inventory; $52,900; total assets; 229,00; common stock 105,000 and retaines earning 52, 548. Cabot Corpoation Income Statement For Year Ended December 31, 2013. Sales 452,600 Coat of goods sold 296,950; Gross profit 155.650; Operating expenses 99,000; Interest expenses 3800: Income before taxes 52,850; Income taxes 21290: Net income 31,500. Cabot Corpration Balance Sheet December 31, 2013. Assets Cash 14,000; Short term 9600;Accounts recevable,net 31600; Notes receivable trade 3000; Merchandise inventory 36150; Prepaid expenses 2850; Plant assets net 153,300; Total assets 250,500;   Liabilitites and Equity Accounts payable 23500; Accured wages payable 4000; Income taxes

payable 3100; Long term note payable secured by mortgage on plant assets 68400; Common Stock 105000; Retained

earnings 46500; Total liabilties and equity 250,500 * 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. inventoryturnover 5. days sales in inventory 6. debit to equity ratio 7. time interest earned 8. profit marginratio 9. total asset turnover 10. return on total assets 11. return on common stockholders equity. use 365 days a year. do not round inyermediate calculation

Explanation / Answer

Question 1. Cash 14000 Short term 9600 Accounts Receivable 31600 Notes Receivable 3000 Inventory 36150 Current Assets 94350.00 Accounts Payable 23500 Wages Payable 4000 Income tax payable 3100 Current Liabilities 30600 Current Ratio ( 94350/30600) 3.08 Question 2. Current Assets 94350 Less: Inventory 36150 Quik Assets 58200 Acid test ratio (58,200/30600) 1.90 Question 3. Days Sales uncollected = Accounts Receivable/Sales * 365 =(31,600+3000)/452600 x 365 =27.90 days Question 4. Inventory Turnover = 452,600/36150 = 12.52 Question 5. Days sales in inventory = 365/12.52 = 29.15 days Question 6. Common stock 105000 Retained Earnings 46500 Total Equity 151500 Long term date 68400 Debt to equity ratio (68400/151500) 0.45 Question 7. Time interest earned = (52850+3800)/3800 = 14.91 Question 8. Profit margin ratio = 31500/452600=6.96% Question 9 Total Assets Turnover = 452600/250500=1.81 Question 10. Return on Total assets = 31500/250500=12.57% Question 11 Return on common stockholders equity = 31500/151500= 20.79%

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