Question

Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2017, were inventory, $48,900; total assets, $199,400; common stock, $82,000; and retained earnings, $33,888.)

CABOT CORPORATION Income Statement For Year Ended December 31, 2018
Sales	$	450,600
Cost of goods sold		298,050
Gross profit		152,550
Operating expenses		99,300
Interest expense		4,500
Income before taxes		48,750
Income tax expense		19,638
Net income	$	29,112

CABOT CORPORATION Balance Sheet December 31, 2018
Assets					Liabilities and Equity
Cash		$	10,000		Accounts payable	$	17,500
Short-term investments			9,000		Accrued wages payable		4,600
Accounts receivable, net			34,000		Income taxes payable		4,500
Merchandise inventory			34,150		Long-term note payable, secured by mortgage on plant assets		66,400
Prepaid expenses			2,550		Common stock		82,000
Plant assets, net			148,300		Retained earnings		63,000
Total assets		$	238,000		Total liabilities and equity	$	238,000
Compute the days' sales uncollected.
	(3) Days' Sales Uncollected Choose Numerator: / Choose Denominator: x Days = Days Sales Uncollected / x = Days sales uncollected 2018: / x = 0 days

Compute the inventory turnover.

	(4) Inventory Turnover Choose Numerator: / Choose Denominator: = Inventory Turnover / = Inventory turnover 2018: / = 0 times

Compute the days' sales in inventory.

	(5) Days’ Sales in Inventory Choose Numerator: / Choose Denominator: x Days = Days’ Sales in Inventory / x = Days’ sales in inventory 2018: / x = 0 days

Answer 1

days sales uncollected	(ending accounts receivable / net sales)*365
	2018($)
ending accounts receivable	34000
net sales	450600
ratio	27.54 days
inventory turnover	cost of goods sold / average inventory
	2018($)
cost of goods sold	298050
opening inventory	48900
closing inventory	34150
average inventory	41525
ratio	7.18 times
days sales in inventory	(ending inventory / cost of goods sold)*365
	2018($)
cost of goods sold	298050
closing inventory	34150
ratio	41.82 days