Problem 17-4A 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, $56,900; total assets, $249,400; common stock, $81,000; and retained earnings, $51,308.)

CABOT CORPORATION Income Statement For Year Ended December 31, 2017
Sales	$	453,600
Cost of goods sold		298,350
Gross profit		155,250
Operating expenses		99,000
Interest expense		4,100
Income before taxes		52,150
Income taxes		21,008
Net income	$	31,142

CABOT CORPORATION Balance Sheet December 31, 2017
Assets				Liabilities and Equity
Cash	$	18,000		Accounts payable	$	19,500
Short-term investments		8,000		Accrued wages payable		4,200
Accounts receivable, net		31,200		Income taxes payable		4,600
Notes receivable (trade)*		5,000
Merchandise inventory		40,150		Long-term note payable, secured by mortgage on plant assets		65,400
Prepaid expenses		2,500		Common stock		81,000
Plant assets, net		152,300		Retained earnings		82,450
Total assets	$	257,150		Total liabilities and equity	$	257,150

* 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:		/		=	0	to 1
(2)	Acid-Test Ratio
	Choose Numerator:	/	Choose Denominator:	=	Acid-Test Ratio
		/		=	Acid-Test Ratio
2017:		/		=	0	to 1

Compute the days' sales uncollected.

(3)	Days' Sales Uncollected
	Choose Numerator:	/	Choose Denominator:	x	Days	=	Days Sales Uncollected
		/		x		=	Days sales uncollected
2017:		/		x		=	0	days

Compute the inventory turnover.

(4)	Inventory Turnover
	Choose Numerator:	/	Choose Denominator:	=	Inventory Turnover
		/		=	Inventory turnover
2017:		/		=	0	times

Compute the days' sales in inventory.

(5)	Days Sales in Inventory
	Choose Numerator:	/	Choose Denominator:	x	Days	=	Days Sales in Inventory
		/		x		=	Days sales in inventory
2017:		/		x		=	0	days

Compute the debt-to-equity ratio.

(6)	Debt-to-Equity Ratio
	Choose Numerator:	/	Choose Denominator:	=	Debt-to-Equity Ratio
		/		=	Debt-to-equity ratio
2017:		/		=	0	to 1

Compute the times interest earned.

(7)	Times Interest Earned
	Choose Numerator:			/	Choose Denominator:	=	Times Interest Earned
		+		/		=	Times interest earned
2017:		+		/		=	0	times

Compute the profit margin ratio.

(8)	Profit Margin Ratio
	Choose Numerator:	/	Choose Denominator:	=	Profit margin ratio
		/		=	Profit margin ratio
2017:		/		=	0	%

Compute the total asset turnover.

(9)	Total Asset Turnover
	Choose Numerator:	/	Choose Denominator:	=	Total Asset Turnover
		/		=	Total asset turnover
2017:		/		=	0	times

Compute the return on total assets.

(10)	Return on Total Assets
	Choose Numerator:	/	Choose Denominator:	=	Return on Total Assets
		/		=	Return on total assets
2017:		/		=	0	%

Compute the return on common stockholders' equity.

(11)	Return on Common Stockholders' Equity
	Choose Numerator:			/	Choose Denominator	=	Return On Common Stockholders' Equity
		-		/		=	Return on common stockholders' equity
2017:		-		/		=	0	%