Question

What is the Average Total Assets, Average Total Inventory, Preferred Dividends, and Average Common Stockholders Equity ?? please show how with steps

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, $49,900; total assets, $229,400; common stock, $89,000; and retained earnings, $33,215.)

CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 451,600 Cost of goods sold 297,350 Gross profit 154,250 Operating expenses 99,100 Interest expense 4,100 Income before taxes 51,050 Income tax expense 20,565 Net income $ 30,485 $ Assets Cash Short-term investments Accounts receivable, net Merchandise inventory CABOT CORPORATION Balance Sheet December 31 Liabilities and Equity 8,000 Accounts payable 8,480 Accrued wages payable 33,000 Income taxes payable 38,150 Long-term note payable, secured by mortgage on plant assets 2,650 Common stock 151,300 Retained earnings $ 241,500 Total liabilities and equity 17,500 5,000 2,900 63,400 Prepaid expenses Plant assets, net Total assets 89,000 63,700 $ 241,500

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.)

Answer 1

Average total assets	(Beginning total assets + Ending total assets)/2
Average total assets	(229400+241500)/2
Average total assets	$235,450.00
Average total inventory	(Beginning inventory+Ending inventory)/2
Average total inventory	(49900+38150)/2
Average total inventory	$44,025.00
Preferred dividend is $0 as company does not have preferred shares
Average common stockholder's equity	(Beginning equity+Ending equity)/2
Equity	Common stock+Retained earnings
Average common stockholder's equity	((89000+33215)+(89000+63700))/2
Average common stockholder's equity	(122215+152700)/2
Average common stockholder's equity	$137,457.50
1
Current ratio	Current assets/Current liabilities
Current assets	$90,200	8000+8400+33000+38150+2650
Current liabilities	$25,400	17500+5000+2900
Current ratio	3.6
2.
Acid test ratio	(Current assets-Merchandise inventory-Prepaid expenses)/Current liabilities
Acid test ratio	(8000+8400+33000)/25400
Acid test ratio	49400/25400
Acid test ratio	1.9
3
Days' sales uncollected	(Ending accounts receivables/Net sales)*365
Days' sales uncollected	(33000/451600)*365
Days' sales uncollected	26.7	days
4
Inventory turnover	Cost of goods sold/Average inventory
Inventory turnover	297350/44025
Inventory turnover	6.8
5
Days' sales in inventory	(Ending inventory/Cost of goods sold)*365
Days' sales in inventory	(38150/297350)*365
Days' sales in inventory	46.8	days
6
Debt to equity ratio	Total liabilities/Total equity
Debt to equity ratio	(17500+5000+2900+63400)/(89000+63700)
Debt to equity ratio	88800/152700
Debt to equity ratio	0.6
7
Times interest earned ratio	(Income before tax+Interest expense)/Interest expense
Times interest earned ratio	(51050+4100)/4100
Times interest earned ratio	55150/4100
Times interest earned ratio	13.5
8
Profit margin ratio	Net income/Sales
Profit margin ratio	30485/451600
Profit margin ratio	6.8%
9
Total asset turnover	Net sales/Average total assets
Total asset turnover	451600/235450
Total asset turnover	1.9
10
Return on total assets	Net income/Average total assets
Return on total assets	30485/235450
Return on total assets	12.9%
11
Return on common stockholders' equity	(Net income-Preferred dividend)/Average common stockholders' equity
Return on common stockholders' equity	(30485-0)/137457.5
Return on common stockholders' equity	22.2%