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Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2016, were inventory, $52.900; total assets, $229,400; common stock, $88,000; and retained earnings. $32,712.) CABOT CORPORATION Income Statement For Year Ended December 31, 2017 Sales $ 450, 600 Cost of goods sold 297,650 Gross profit 152,950 Operating expenses 99, 100 Interest expense 3,800 Income before taxes 50,050 Income taxes 20. 162 Net Income $ 29,888 $ 16,500 3,200 CABOT CORPORATION Balance Sheet December 31, 2015 Assets Liabilities and Equity Cash $ 8.000 Accounts payable Short-term 8.400 Accrued wages payable investments Accounts 31,400 Income taxes payable receivable, not Notes receivable (trade) 3.500 Merchandise 34,150 Long-term note payable, secured by inventory mortgage on plant assets Prepaid expenses 2.650 Common stock Plant assets, net 150,00 Retained earnings Total assets $ 238,400 Total liabilities and equity 3,700 64,400 88,000 62.600 $ 238, 400 * These are short-term notes receivable arising from customer (trade) sales. 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

Current Ratio / Choose Denominator = A Choose Numerator Current assets $ 89,100 Calculation: Current liabilities $ 23,400 current Current 3.76 Ratio. Ratio to 1 Current Assets = (Cash & short term investments & Accounts Receivable, net & Merchandise Inventory. + Notes receivable & Prepaid expenses) = ($8,000 + $8,400 + $31,400 + $34,150+ +$3,500+$2,650) 2 $ 89,100 Current liabilities = (Accounts Payable & Accrued wages payable + Income taxes payable) = ($16,500 + $3,200 + $ 3,700 $ 23,400 Acid- Test Ratio Choose Numerator / Choose Denominator = Acid Test Ratio Quick assets / Current liabilities = Acid - Test Ratio & 51,300 1 & 23,400 = 2.19 to 1 Calculation : Quick Assets = (current Assets - Merchandise Inventory - Prepaid expenses) ($88,100 - $34,150 - $ 2,650) $ 51,300

uncollected Days' sales Uncollected Choose Numerator / Choose Denominator X Days Days' sales, uncollected Current receivables / Net sales 365 Days sales $ 34,900 & 450, 600 x 365 t 25.27 days Calculation: Current Receivables = Accounts receivable, nett Notes receivable = $ 31,400 + $ 3,500 $34,900 Inventory Turnover choose Numerator / Choose Denominator Inventory Turnover Cost of goods sold 1 Average Inventory = inventory Turnover $ 297,6 50 - & 43,525 = 6.84 times Calculation: 4 Average Inventory = Begining inventory + Ending inventory 2 Average Inventory = $52,900 + $ 34, ISO $ 87,050 2 $ 43,525 = (5) Choose Numerator Merchandise Inventory $ 34,150 Days' sales in Inventory Choose H Days Sales Denominator X Days în inventory Cost of goods sold 101 in inventory $297,650 x 365 t 41.88 days 365 Days' sales /

Return on Common Stockholders equity Choose Numerator Choose - Return on common I Denominator 1-stockholders equity Net Preferred I Average common Return on common income I Dividends stockholders equity - stockholders equity $29,888 - $ 0 17 & 135, 656 22103 Calculations Average common stockholders' equity = I(Beginning common stock & Ending common stock + Beginning Retained earnings & Ending Retained earnings) 12] = (#88,000 + $ 88,000 + $ 32,712 + $62,600 2] & 271,312 - 2 $ 135,656 11