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Problem 13-4A Calculation of financial statement ratios LO P3 Selected year-end financial statements of Cabot Corporation fol
These are short-term notes receivable arising from customer (trade) sales. Required: Compute the following: (1) current ratio
Exercise 13-3 Computation and analysis of trend percents LO P1 Sales Cost of goods sold Accounts receivable 2017 2016 2015 20
1 Choose Denominator: Sales 2017: 2016: 2015: 2014: Trend Percent for Cost of Goods Sold: 1 Choose Denominator: Choose Numera
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Answer #1

Current ratio = Current assets / Current liabilities

Current ratio = $22000+9400+29600+5500+34150+3100 / $16500+3200+3400

Current ratio = $103,750 / 23,100 = 4.49

Acid test ratio = Current assets - inventory - prepaid expenses /  Current liabilities

Acid test ratio = $103750-34150-3100 / 23100

Acid test ratio = $66,500 / 23,100 = 2.88

Days sales uncollected = Accounts receivable / Sales * 365 days

Days sales uncollected = $29,600 / 451,600 * 365 = 24 days

Inventory turnover = Cost of goods sold / Average inventory

Inventory turnover = $298,050 / (50,900+34,150/2)

Inventory turnover = $298,050 / $42,525 = 7

Days sales in inventory = 365 / Inventory turnover

Days sales in inventory = 365 / 7 = 52 days

Debt to equity ratio = Total liabilities / Total stockholders equity

Debt to equity ratio = $16500+3200+3400+68400 / 90000+73550

Debt to equity ratio = $91,500 / 163,550 = 0.56 or 56%

Times interest earned = Earnings before interest and tax / Interest expense

Times interest earned = $153550-99000 / 3900

Times interest earned = $54,550 / 3,900 = 14

Profit margin ratio = Net income / Sales * 100

Profit margin ratio = $30,246 / 451,600 *100 = 6.7%

Total asset turnover = Sales / Average total assets

Total asset turnover = $451,600 / (249,400+255,050 /2)

Total asset turnover = $451,600 / 252,225 = 1.79

Return on total asset = Net income / Average total assets

Return on total asset = $30,246 / 252,225 *100 = 12%

Return on common stockholders equity = Net income / Average common stockholders equity

Return on common stockholders equity = $30,246 / (133,304+163,550/2)

Return on common stockholders equity = $30,246 / 148,427 *100 = 20.4%

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