Problem 13-4A Calculation of financial statement ratios LO P3 Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2016, were inventory, $47,900; total assets, $229,400; common stock, $82,000; and retained earnings, $50,396.) CABOT CORPORATION Income Statement For Year Ended December 31, 2017 $ 452,600 297,850 Sales Cost of goods sold Gross profit Operating expenses Interest expense 154,750 99,500 4,000 51,250 20,646 Income before taxes Income taxes Net income 30,604 CABOT CORPORATION Balance Sheet December 31, 2017 Liabilities and Equity Accounts payable Accrued wages payable Income taxes payable Assets Cash 12,000 15,500 3,000 4,600 Short-term investments 9,400 Accounts receivable, net Notes receivable (trade)* Merchandise inventory 31,600 6,000 36,150 Lonq-term note payable, secured by 64,400 mortgage on plant assets Common stock Retained earnings Prepaid expenses Plant assets, net 3,050 152,300 82,000 81,000 $ 250,500 Total liabilities and equity 250,500 Total assets 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) 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.) Compute the current ratio and acid-test ratio. (1) Current Ratio Choose Numerator: Choose Denominator: Current Ratio Current ratio = 2017 to 1 - (2) Acid-Test Ratio Choose Denominator: Acid-Test Ratio Choose Numerator: Acid-Test Ratio - to 1 2017: Inventory Turnover (4) Inventory Turnover Choose Numerator: Choose Denominator: Inventory turnover times 2017: Req 3 Req 5 (6) Debt-to-Equity Ratio Choose Numerator: Choose Denominator: Debt-to-Equity Ratio Debt-to-equity ratio to 1 2017: Req 5 Req 7> 161 Times Interest Earned (7) Choose Denominator: Choose Numerator: Times Interest Earned Times interest earned times 2017: (8) Profit Margin Ratio Choose Numerator: Choose Denominator: Profit margin ratio Profit margin ratio 2017 % Req 7 Req 9> (9) Total Asset Turnover Choose Denominator: Choose Numerator: Total Asset Turnover Total asset turnover times 2017: Req 8 Req 10 (10) Return on Total Assets Choose Numerator: Choose Denominator: Return on Total Assets Return on total assets % 2017: KReq 9 Req 11 (11) Return on Common Stockholders' Equity Choose Numerator: Choose Denominator =Return On Common Stockholders' Equity Return on common stockholders' equity = % 2017: Reg 11> Req 10 (3) Days' Sales Uncollected Choose Denominator: Choose Numerator: Days Days Sales Uncollected x Days sales uncollected 2017 days Req 1 and 2 Req 4