70.2K

Verified Solution

Link Copied!

Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2012, were inventory, $48,900; total assets, $199,400; common stock, $115,000; and retained earnings, $52,348.)

CABOT CORPORATION Income Statement For Year Ended December 31, 2013
Sales	$	447,600
Cost of goods sold		297,950
Gross profit		149,650
Operating expenses		98,600
Interest expense		4,800
Income before taxes		46,250
Income taxes		18,631
Net income	$	27,619

CABOT CORPORATION Balance Sheet December 31, 2013
Assets				Liabilities and Equity
Cash	$	18,000		Accounts payable	$	26,500
Short-term investments		9,000		Accrued wages payable		3,400
Accounts receivable, net		31,200		Income taxes payable		4,500
Notes receivable (trade)*		6,500		Long-term note payable, secured
Merchandise inventory		40,150		by mortgage on plant assets		62,400
Prepaid expenses		3,000		Common stock		115,000
Plant assets, net		153,300		Retained earnings		49,350
Total assets	$	261,150		Total liabilities and equity	$	261,150

* These are short-term notes receivable arising from customer (trade) sales.

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.

Answer & Explanation Solved by verified expert

See Answer