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Question

Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance

sheet amounts at December 31, 2016, were inventory, $54,900; total assets, $219,400; common stock, $82,000; and retained earnings, $52,705.)

 

CABOT CORPORATION

Income Statement

For Year Ended December 31, 2017Sales$449,600 Cost of goods sold 298,150 Gross profit 151,450 Operating expenses 99,400 Interest expense 4,500 Income before taxes 47,550 Income taxes 19,155 Net income$28,395 

 

CABOT CORPORATION

Balance Sheet

December 31, 2017Assets   Liabilities and Equity   Cash$20,000 Accounts payable$15,500 Short-term investments 8,800 Accrued wages payable 3,000 Accounts receivable, net 29,800 Income taxes payable 4,100 Notes receivable (trade)* 4,500     Merchandise inventory 40,150 Long-term note payable, secured by mortgage on plant assets 70,400 Prepaid expenses 2,550 Common stock 82,000 Plant assets, net 150,300 Retained earnings 81,100 Total assets$256,100 Total liabilities and equity$256,100 

 

* 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.)

 

Top Answer

1.Current ratio is 4.6814 2.Acid ratio is 2.7920 3.Days sales uncollected is 24.19 days... View the full answer

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