Problem 13-4A Calculating financial statement ratios LO P3 Selected current year-end financial statements of Cabot Corporation follow. (All sales were on credit, selected balance sheet amounts at December 31 of the prior year were inventory S51,900, total assets, $209,400, common stock, $86,000; and retained earnings. $35.546) CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 452,600 Cost of goods sold 298.150 Gross profit 154, 450 Operating expenses 98,700 Interest expense 4.500 Incone before taxes 51,250 Income tax expenne 20.646 Net Income $ 30,604 Assets Cash Short-term investments Accounts receivable.net Merchandise inventory CABOT CORPORATION Balance Sheet December 31 Liabilities and Equity $12,000 Accounts payable 8,000 Accrued wages payable 32,800 Income taxes payable 30,150 Long-term note payable, secured by mortgage on plant assets 2.500 Common stock 151.300 Retained earnings $ 244,750 total liabilities and equity $ 18,500 2,800 4.300 67,400 Prepaid expenses Plant assets, bet Total asset 86,000 65,750 $ 244,750 Required: Compute the following(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.) LLLL Accounts receivable, net Merchandise inventory 4,300 67,400 Prepaid expenses plant assets, net Total assets 32,800 Income taxes payable 38,150 Long-term note payable, secured by mortgage on plant assets 2,500 Common stock 151,300 Retained earnings $ 244,750 Total liabilities and equity 86,000 65,750 $ 244,750 Required: Compute the following: (1) current ratio, (2) acid-test ratio, (3) days' sales uncollected. (4) Inventory turnover. (5) days' sales (6) debt-to-equity ratio, (7) times interest earned. (8) profit margin ratio, (9) total asset turnover (10) return on total assets, a on common stockholders' equity. (Do not round intermediate calculations.) Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Req Req 8 Reg 9 Reg 10 Reg 11 Compute the current ratio and acid-test ratio. Choose Numerator: Current assets Current Ratio Choose Denominator: Current liabilities Current Ratio Current ratio 0 to 1 / (2) Choose Numerator: Quick assets Acid-Test Ratio Choose Denominator 1 Current liabilities Acid-Test Ratio Acid-Test Ratio 0 to 1 Red 1 and 2 Req3 > Required: Compute the following: (1) current ratio, (2) acid-test ratio, (3) days' sales uncollected, (4) Inventory turnover, (5) days' sal (6) debt-to-equity ratio. (7) times interest earned. (8) profit margin ratio (9) total asset turnover (10) return on total assets on common stockholders' equity. (Do not round intermediate calculations.) Complete this question by entering your answers in the tabs below. Reg 1 and 2 Reg 3 Reg 4 Reg 5 Reg 11 Reg 6 Reg 7 Reg 10 Req8 Reg 9 Compute the days' sales uncollected. (3) Days' Sales Uncollected Choose Numerator: / Choose Denominator: X Days Accounts Receivable 2 Not sales 365 net 1 Days Sales Uncollected = Days sales uncollected 0 days Req 1 and 2 Req 4 > Required: Compute the following: (1) current ratio, (2) acid-test ratio, (3) days' sales uncollected (4) inventory turnover, (6) debt-to-equity ratio, (7) times interest earned, (8) profit margin ratio, (9) total asset turnover (10) return on on common stockholders' equity. (Do not round intermediate calculations.) Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 4 Reg 5 Req6 Req 7 Reg 8 Req9 Reg 10 Compute the inventory turnover. (4) Choose Numerator: Cost of goods sold Inventory Turnover Choose Denominator: Average inventory Inventory Turnover - Inventory turnover 0 times 1 Req 1 and 2 Reg 3 Reg 4 Req5 Reg 6 Req 7 Req8 Reg 9 Reg 10 Reg 11 Compute the days' sales in inventory. (5) 1 Choose Numerator: Merchandise Inventory Days Sales In Inventory Choose Denominator: X Cost of goods sold Days 365 Days' Sales in Inventory Days' sales in inventory 0 days 1 Req 7 Req 8 Req 10 Reg 6 Reg 5 Req9 Req 1 and 2 Reg 3 Reg 4 Compute the debt-to-equity ratio. (6) Choose Numerator: Total liabilities Debt-to-Equity Ratio 1 Choose Denominator: 1 Total equity = Debt-to-Equity Ratio Debt-to-equity ratio 1 O to 1 assets ed: te the following: (1) current ratio, (2) acid-test ratio, (3) days' sales uncollected. (4) inventory turnover. (5) days' sales in -to-equity ratio, (7) times interest earned. (8) profit margin ratio (9) total asset turnover (10) return on total assets, and mon stockholders' equity. (Do not round intermediate calculations.) plete this question by entering your answers in the tabs below. Reg 4 Reg 3 Reg 6 and 2 Reg 9 Reg 7 Reqs Req 8 Reg 11 Reg 10 bute the times interest earned. Times Interest Earned 1 Choose Denominator: Times Interest Earned Choose Numerator: interest expense Income before tax Interest expense Tinges interest earned O times / Req 10 Req 3 Req 1 and 2 Req 4 Req 5 Reg 7 Req8 Reg 9 Reg 6 Compute the profit margin ratio. (8) Choose Numerator: Net income Profit Margin Ratio 1 Choose Denominator: 1 Net sales 1 Profit margin ratio = Profit margin ratio 0 % 11 Rec Req9 Reg 7 Req8 Req 3 Reg 5 Req 6 Req 1 and 2 Reg 4 Compute the total asset turnover. (9) Choose Numerator: Net sales Total Asset Turnover 1 Choose Denominator: 1 Average total assets Total Asset Turnover Total asset turnover O times 1 Reg 9 Req8 Reg 10 Reg 11 Reg 7 Reg 1 and 2 Reg 3 Reg 4 Reg 5 Reg 6 Compute the return on total assets. (10) 1 Choose Numerator: Net income Return on Total Assets Choose Denominator: Average total assets Return on Total Assets Return on total assets 1 0 % 1 Red 1 and 2 Reg 3 Reg 4 Reg 5 Reg 11 Reg 6 Reg Reg 8 Reg 9 Reg 10 Compute the return on common stockholders' equity. (11) Choose Numerator: Preferred dividends Return on Common Stockholders' Equity Choose Denominator Average common stockholders' equity 4 Return On Common Stockholders' Equity Return on common stockholders' equity Net income OS