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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, $51,900; total assets, $249,400; common stock, $81,000; and retained earnings, $36,386.) Assets Cash Short-term investments Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets CABOT CORPORATION Income Statement For Current Year Ended December 31 $ 448,600 297,950 150,650 98,700 4,200 Sales Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes Income tax expense Net income $ 18,000 8,400 30,400 Income taxes payable 34,150 Long-term note payable, secured by mortgage on plant assets Common stock 2,750 150,300 Retained earnings $ 244,000 Total liabilities and equity 47,750 19,236 $ 28,514 (1) CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity Req 1 and 2 Req 3 Req 4 Req 5 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 equity. Note: Do not round intermediate calculations. Complete this question by entering your answers in the tabs below. Compute the current ratio and acid-test ratio. Accounts payable Accrued wages payable Req 6 Current Ratio Req 7 Req 8 Reg 9 Req 10 $ 18,500 4,000 3,200 72,400 81,000 64,900 $ 244,000 Req 11

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, $51,900; total assets, $249,400; common stock, $81,000; and retained earnings, $36,386.) Assets Cash Short-term investments Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets CABOT CORPORATION Income Statement For Current Year Ended December 31 $ 448,600 297,950 150,650 98,700 4,200 Sales Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes Income tax expense Net income $ 18,000 8,400 30,400 Income taxes payable 34,150 Long-term note payable, secured by mortgage on plant assets Common stock 2,750 150,300 Retained earnings $ 244,000 Total liabilities and equity 47,750 19,236 $ 28,514 (1) CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity Req 1 and 2 Req 3 Req 4 Req 5 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 equity. Note: Do not round intermediate calculations. Complete this question by entering your answers in the tabs below. Compute the current ratio and acid-test ratio. Accounts payable Accrued wages payable Req 6 Current Ratio Req 7 Req 8 Reg 9 Req 10 $ 18,500 4,000 3,200 72,400 81,000 64,900 $ 244,000 Req 11

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 52E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...
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Req 1 and 2 Req 3 Compute the times interest earned. (7) Req 4 Req 1 and 2 Req 3 (8) Numerator: + (9) Compute the profit margin ratio. Numerator: Req 1 and 2 Req 3 Req 5 Req 4 Numerator: 1 1 1 Compute the total asset turnover. Req 4 Req 6 1 T Req 7 Times Interest Earned 1 1 1 Req 5 < Reg 6 < Req 7 Req 6 Denominator: Profit Margin Ratio Denominator: Req 8 Req 5 Req 6 < Req 8 Total Asset Turnover Denominator: Req 9 Req 7 Reg 8 > = Req 7 = = = = = = = Req 9 > Req 10 Req 11 Times Interest Earned Req 8 Times interest earned Profit margin ratio Profit margin ratio Req 10 > Req 8 Req 9 Req 9 Total Asset Turnover Total asset turnover times times % Req 1 and 2 Req 3 (11) Compute the return on total assets. (10) Numerator: Req 1 and 2 Req 3 Compute the return on equity. Req 4 Numerator: Req 4 1 1 1 Req 5 Req 5 Return on Total Assets Denominator: Req 6 < Req9 Req 6 Denominator Return on Equity Req 7 < Req 10 Req 7 = = Req 8 Req 8 Req 11 > Return on Total Assets Return on total assets Req 9 Req 9 Req 11 > Req 10 Return On Equity Return on equity Req 10 % Req 11 %
Transcribed Image Text:Req 1 and 2 Req 3 Compute the times interest earned. (7) Req 4 Req 1 and 2 Req 3 (8) Numerator: + (9) Compute the profit margin ratio. Numerator: Req 1 and 2 Req 3 Req 5 Req 4 Numerator: 1 1 1 Compute the total asset turnover. Req 4 Req 6 1 T Req 7 Times Interest Earned 1 1 1 Req 5 < Reg 6 < Req 7 Req 6 Denominator: Profit Margin Ratio Denominator: Req 8 Req 5 Req 6 < Req 8 Total Asset Turnover Denominator: Req 9 Req 7 Reg 8 > = Req 7 = = = = = = = Req 9 > Req 10 Req 11 Times Interest Earned Req 8 Times interest earned Profit margin ratio Profit margin ratio Req 10 > Req 8 Req 9 Req 9 Total Asset Turnover Total asset turnover times times % Req 1 and 2 Req 3 (11) Compute the return on total assets. (10) Numerator: Req 1 and 2 Req 3 Compute the return on equity. Req 4 Numerator: Req 4 1 1 1 Req 5 Req 5 Return on Total Assets Denominator: Req 6 < Req9 Req 6 Denominator Return on Equity Req 7 < Req 10 Req 7 = = Req 8 Req 8 Req 11 > Return on Total Assets Return on total assets Req 9 Req 9 Req 11 > Req 10 Return On Equity Return on equity Req 10 % Req 11 %
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, $51,900; total assets, $249,400; common stock, $81,000; and retained earnings, $36,386.) Assets Cash Short-term investments Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Operating expenses Interest expense Income before taxes Income tax expense Net income CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 448,600 297,950 Cost of goods sold Gross profit (1) Req 1 and 2 Req 3 Req 4 Req 5 (2) $ 18,000 8,400 150,650 98,700 4,200 47,750 19,236 $ 28,514 Complete this question by entering your answers in the tabs below. Compute the current ratio and acid-test ratio. Numerator: 30,400 34,150 2,750 150,300 $ 244,000 Total liabilities and equity 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 equity. Note: Do not round intermediate calculations. Numerator: 1 1 CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity 1 1 1 Accounts payable Accrued wages payable Income taxes payable Long-term note payable, secured by mortgage on plant assets Common stock Retained earnings. Req 6 Current Ratio Denominator: Acid-Test Ratio Denominator: Req 7 = = Req 8 Req 9 Current Ratio Current ratio to 1 Acid-Test Ratio Acid-Test Ratio to 1 Req 10 $ 18,500 4,000 3,200 72,400 Req 11 81,000 64,900 $ 244,000 Complete this question by entering your answers in the tabs below. Req 1 and 2 (3) Compute the days' sales uncollected. (4) Req 1 and 2 Req 3 Req 1 and 2 Req 3 (5) Compute the inventory turnover. Req 1 and 2 Req 4 Numerator: (6) Numerator: Req 3 Compute the days' sales in inventory. Numerator: Req 3 Req 5 Req 4 Req 4 Numerator: Req 4 Compute the debt-to-equity ratio. 1 1 1 1 1 1 1 1 Req 6 Req 5 1 Days' Sales Uncollected 1 Denominator: 1 Req 5 Req 7 < Req 1 and 2 < Req 3 Inventory Turnover Denominator: Req 5 Req 6 Req 6 Days' Sales in Inventory Denominator: < Req 4 Req 8 Req 7 Req 6 Debt-to-Equity Ratio < Req 5 Denominator: X * Days x Reg 9 x Req 4 > Req 7 = Req 8 x Days X Req 7 = = Req 5 > Req6 > = = = Reg 10 Days Sales Uncollected Req 8 Days sales uncollected Req 11 Req 9 Inventory Turnover Inventory turnover times Req 8 days Req 9 Req 7 > Days' Sales in Inventory Days' sales in inventory days Req 10 Req 9 Debt-to-Equity Ratio Debt-to-equity ratio to 1
Transcribed Image Text: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, $51,900; total assets, $249,400; common stock, $81,000; and retained earnings, $36,386.) Assets Cash Short-term investments Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Operating expenses Interest expense Income before taxes Income tax expense Net income CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 448,600 297,950 Cost of goods sold Gross profit (1) Req 1 and 2 Req 3 Req 4 Req 5 (2) $ 18,000 8,400 150,650 98,700 4,200 47,750 19,236 $ 28,514 Complete this question by entering your answers in the tabs below. Compute the current ratio and acid-test ratio. Numerator: 30,400 34,150 2,750 150,300 $ 244,000 Total liabilities and equity 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 equity. Note: Do not round intermediate calculations. Numerator: 1 1 CABOT CORPORATION Balance Sheet December 31 of current year Liabilities and Equity 1 1 1 Accounts payable Accrued wages payable Income taxes payable Long-term note payable, secured by mortgage on plant assets Common stock Retained earnings. Req 6 Current Ratio Denominator: Acid-Test Ratio Denominator: Req 7 = = Req 8 Req 9 Current Ratio Current ratio to 1 Acid-Test Ratio Acid-Test Ratio to 1 Req 10 $ 18,500 4,000 3,200 72,400 Req 11 81,000 64,900 $ 244,000 Complete this question by entering your answers in the tabs below. Req 1 and 2 (3) Compute the days' sales uncollected. (4) Req 1 and 2 Req 3 Req 1 and 2 Req 3 (5) Compute the inventory turnover. Req 1 and 2 Req 4 Numerator: (6) Numerator: Req 3 Compute the days' sales in inventory. Numerator: Req 3 Req 5 Req 4 Req 4 Numerator: Req 4 Compute the debt-to-equity ratio. 1 1 1 1 1 1 1 1 Req 6 Req 5 1 Days' Sales Uncollected 1 Denominator: 1 Req 5 Req 7 < Req 1 and 2 < Req 3 Inventory Turnover Denominator: Req 5 Req 6 Req 6 Days' Sales in Inventory Denominator: < Req 4 Req 8 Req 7 Req 6 Debt-to-Equity Ratio < Req 5 Denominator: X * Days x Reg 9 x Req 4 > Req 7 = Req 8 x Days X Req 7 = = Req 5 > Req6 > = = = Reg 10 Days Sales Uncollected Req 8 Days sales uncollected Req 11 Req 9 Inventory Turnover Inventory turnover times Req 8 days Req 9 Req 7 > Days' Sales in Inventory Days' sales in inventory days Req 10 Req 9 Debt-to-Equity Ratio Debt-to-equity ratio to 1
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