Question

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, $46,900; total assets, $219,400; common stock, $81,000; and retained earnings, $38,566.)

CABOT CORPORATION Income Statement For Current Year Ended December 31
Sales	$	450,600
Cost of goods sold		298,450
Gross profit		152,150
Operating expenses		99,500
Interest expense		4,700
Income before taxes		47,950
Income tax expense		19,316
Net income	$	28,634

CABOT CORPORATION Balance Sheet December 31
Assets				Liabilities and Equity
Cash	$	10,000		Accounts payable	$	15,500
Short-term investments		9,200		Accrued wages payable		4,000
Accounts receivable, net		31,800		Income taxes payable		3,100
Merchandise inventory		38,150		Long-term note payable, secured by mortgage on plant assets		71,400
Prepaid expenses		2,750		Common stock		81,000
Plant assets, net		150,300		Retained earnings		67,200
Total assets	$	242,200		Total liabilities and equity	$	242,200

(1) Choose Numerator: Current assets Current Ratio I Choose Denominator: | Current liabilities | 1 | $ Current Ratio Current ratio 22,600 = to 1 (2) Acid-Test Ratio pose Denominator: Choose Numerator: Quick assets = Acid-Test Ratio = Acid-Test Ratio 22,600] = 1 to 1 Current liabilities $ 1

Answer 1

Current Assets 91,900.00 CURRENT RATIO Current Liabilities $ 22,600.00 Current Ratio 4.066371681 $ = to 1 2 QUICK RATIO Current Liabilities $ 22,600.00 Quick Assets 51,000.00 $ / = = Current Ratio 2.256637168 to 1 Accounts Receivable 31,800.00 DAYS SALES UNCOLLECTED Net Sales Days 4,50,600.00 365 Days Sales uncollected 25.75898802 1 days $ Merchandise Inventory $ 38,150.00 DAYS SALES IN INVENTORY Cost of Goods Sold * Days $ 2,98,450.00 * 365 / = = Days sale in Inventory 46.65689395 days Net Sales 4,50,600.00 TOTAL ASSET TURNOVER Average total Assets $ 2,30,800.00 = = Total Asset Turnover 1.952339688 times Ś Net Income 28,634.00 RETURN ON TOTAL ASSETS T Average total Assets = $ 2,30,800.00 = Return on assets 12.40641248 %

Note:

1. Please round off the answers as per the requirement of the question.
2. Quick assets = Cash + Short term investments + Accounts Receivable
3. Average Total Assets = (Opening Total Assets + Closing Total Assets) / 2