Problem 13-4A (Static) 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, $48,900; total assets, $189,400; common stock, $90,000; and retained earnings, $33,748.)

CABOT CORPORATION
Balance Sheet
December 31 of current year
Assets		Liabilities and Equity
Cash	$ 10,000	Accounts payable	$ 17,500
Short-term investments	8,400	Accrued wages payable	3,200
Accounts receivable, net	33,700	Income taxes payable	3,300
Merchandise inventory	32,150	Long-term note payable, secured by mortgage on plant assets	63,400
Prepaid expenses	2,650	Common stock	90,000
Plant assets, net	153,300	Retained earnings	62,800
Total assets	$ 240,200	Total liabilities and equity	$ 240,200

CABOT CORPORATION
Income Statement
For Current Year Ended December 31
Sales	$ 448,600
Cost of goods sold	297,250
Gross profit	151,350
Operating expenses	98,600
Interest expense	4,100
Income before taxes	48,650
Income tax expense	19,598
Net income	$ 29,052

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 equity. (Do not round intermediate calculations.)

Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Compute the current ratio and acid-test ratio. (1) Numerator: 1 Current Ratio Current Ratio 1 1 0 to 1 (2) Numerator: Acid-Test Ratio Acid-Test Ratio / / 0 to 1 Req 3 > Current Ratio Denominator: Acid-Test Ratio Denominator: Req 10 Req 11 Days Sales Uncollected Days Sales Uncollected 0 days Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Compute the inventory turnover. Inventory Turnover Numerator: 1 Denominator: Inventory Turnover 1 Inventory Turnover 1 0 times = = = Req 9 Req 10 Req 11 Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Compute the days' sales in inventory. (5) Days' Sales in Inventory Numerator: 1 Denominator: = 1 X = / = Days Req 9 Req 10 Days' Sales in Inventory Days' Sales in Inventory 0 days Req 11 Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Compute the debt-to-equity ratio. (6) Debt-to-Equity Ratio Numerator: 1 Denominator: = Debt-to-Equity Ratio 1 = Debt-to-Equity Ratio 1 = 0 to 1 Req 9 Req 10 Req 11 Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Compute the times interest earned. (7) Times Interest Earned Numerator: 1 + 1 1 Req 11 0 times Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Compute the profit margin ratio. (8) Profit Margin Ratio Numerator: 1 Denominator: Profit margin ratio 1 Profit margin ratio 1 = = = 0% Req 9 Req 10 Req 11 Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Compute the total asset turnover. (9) Total Asset Turnover Numerator: 1 Denominator: = Total Asset Turnover 7 = Total Asset Turnover 1 = 0 times Req 9 Req 10 Req 11 Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Compute the return on total assets. (10) Return on Total Assets Numerator: 7 Denominator: Return on Total Assets 1 Return on Total Assets 1 = = = Req 9 0% Req 10 Req 11 Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Compute the return on equity. (11) Return on Equity Numerator: 1 1 1 Denominator Reg 10 Return On Equity Return On Equity Req 11 %