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 \$55,9 ; total assets, $189,400; common stock$89,000 and retained earnings38,032 )

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Return to 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, $55,900; total assets, $189,400; common stock. $89,000, and retained earnings. $38,032.) CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 450, 600 Cost of goods sold 297,150 Gross profit 153,450 Operating expenses 99,300 Interest expense 4,300 Income before taxes 49,850 Income tax expense 20,082 $ 29, 768 Net income $ Assets Cash Short-term investments Accounts receivable, net Merchandise inventory CABOT CORPORATION Balance Sheet December 31 Liabilities and Equity $ 20,000 Accounts payable 9,200 Accrued wages payable 29,400 Income taxes payable 38,150 Long-term note payable, secured by mortgage on plant assets 2,550 Common stock 149,300 Retained earnings $ 248,600 Total liabilities and equity 16.500 3.800 4,100 67.400 89.000 67,800 $ 248, 600 Prepaid expenses Plant assets, net Total assets

Answer 1

Inventory Turnover Inventory Turnover - Numerator Cost of goods sold 297150 297150 Inventory Turnover Denominator Average Inventory (55900+38150)/2 47025 6.32 Times interest earned :: Numerator Times Interest earneed Times Interest earneed = Earnings before interest and tax (49850+4300) 54150 Denominator Interest Expense 4300 4300 12.59 Profit margin ratio : Numerator Net Income 29768 29768 Denominator Net sales 450600 Profit margin Profit margin 450600 6.61% Return on Total assets :- Numerator Net Income 29768 29768 Return on total assets Return on total assets Denominator Average total assets (248600+189400)/2 219000 13.59%