Question

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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, $53,900, total assets, $239,400, common stock, $86,000, and retained earnings. $43,018.) CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $452,600 Cost of goods sold 297,750 Gross profit 154,850 Operating expenses 98,500 Interest expense 4,300 Income before taxes 52,050 Income tax expense 20,968 Net income 31.082 Assets Cash Short-term investments Accounts receivable, net Merchandise inventory CABOT CORPORATION Balance Sheet December 31 Liabilities and Equity $ 22,000 Accounts payable 8.000 Accrued wages payable 30,200 Income taxes payable 36,150 Long-term note payable, secured by mortgage on plant assets 2.852 Common stock 149.300 Retained earnings $ 248,500 Total liabilities and equity 17,500 3.400 4.189 63.400 86,000 Prepaid expenses Plant assets, net Total assets 74, 100 $248.500 Required:

Answer 1

(9)	Total Assets Turnover
	Choose Numerator	/	Choose Denominator	=	Total assets turnover
	Net sales	/	Average total assets	=	Total assets turnover
	$452600	/	(239400+248500)/2= 243950	=	1.86	times

(11)	Return on Common Stockholders' Equity
	Choose Numerator			/	Choose Denominator	=	Return on Common Stockholders' Equity
	Net income	-	Preferred dividends	/	Average common stockholders' equity	=	Return on Common Stockholders' Equity
	$31082	-	0	/	(86000+43018+86000+74100)/2= $144559		21.50	%