Question

mework Saved Help Save & Exit Sub Check my wo Problem 13-4A 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, $50,900; total assets, $209,400; common stock, $83,000; and retained earnings, $43,558.) CABOT CORPORATION Income Statement For Current Year Ended December 31 $ 453,600 297,950 155,650 99,000 4,500 52,150 21,008 Sales Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes Income tax expense $31,142 Net income CABOT CORPORATION Balance Sheet December 31 Liabilities and Equity Assets $ 16,500 4,000 3,500 70,400 22,000 Accounts payable 9,000 Accrued wages payable 34,000 Incone taxes payable 34,150 Long-term note payable, secured by Cash Short-term investments Accounts receivable, net Merchandise inventory nortgage on plant assets 6 of 6 Next> < Prev

Answer 1

Answer to first 4 parts of the question: Workings: 1) = Choose Numerator: Current Assets $101,800 I 1 1 Current Ratio Choose Denominator: Current Liabilities $24,000 Current Ratio Current Ratio 4.24 to 1 Total Assets Less: Plant assets, net Current Assets Less: Merchandise Inventory Less: Prepaid Expenses Quick Assets $252,100 $150,300 $101,800 $34,150 $2,650 $65,000 = = Choose Numerator: Quick Assets $65,000 Acid-Test Ratio Choose Denominator: Current Liabilities $24,000 1 1 Acid-Test Ratio Acid-Test Ratio 2.71 to 1 = Accounts payable Accrued wages payable Income taxes payable Current liabilities $16,500 $4,000 $3,500 $24,000 3) I Choose Numerator: Accounts Receivable, net $34,000 Days' Sales Uncollected Choose Denominator: X Days Net Credit Sales X Days $453,600 X 365 Days' Sales Uncollected Days' Sales Uncollected 27.36 days I = = Choose Numerator: Cost of Goods Sold $297,950 T. 1 I Inventory Turnover Choose Denominator: Average Inventory $42,525 Inventory Turnover Inventory Turnover 7.01 times Merch. Inventory, beginning $50,900 Merch. Inventory, ending $34,150 Average Inventory $42,525 [($50900 + $34150)/2] =