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, $51,900; total assets, $179,400; common stock, $85,000; and retained earnings, $48,534.)

CABOT CORPORATION Income Statement For Year Ended December 31, 2017
Sales	$	451,600
Cost of goods sold		297,250
Gross profit		154,350
Operating expenses		98,600
Interest expense		4,900
Income before taxes		50,850
Income taxes		20,484
Net income	$	30,366

CABOT CORPORATION Balance Sheet December 31, 2017
Assets				Liabilities and Equity
Cash	$	22,000		Accounts payable	$	17,500
Short-term investments		8,400		Accrued wages payable		4,600
Accounts receivable, net		33,200		Income taxes payable		3,200
Notes receivable (trade)*		4,500
Merchandise inventory		36,150		Long-term note payable, secured by mortgage on plant assets		67,400
Prepaid expenses		3,050		Common stock		85,000
Plant assets, net		149,300		Retained earnings		78,900
Total assets	$	256,600		Total liabilities and equity	$	256,600

* 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.)

Complete this question by entering your answers in the tabs below.

• Req 1 and 2
• Req 3
• Req 4
• Req 5
• Req 6
• Req 7
• Req 8
• Req 9
• Req 10
• Req 11

Compute the current ratio and acid-test ratio.

(1)	Current Ratio
	Choose Numerator:	/	Choose Denominator:	=	Current Ratio
		/		=	Current ratio
2017:		/		=		to 1
(2)	Acid-Test Ratio
	Choose Numerator:	/	Choose Denominator:	=	Acid-Test Ratio
		/		=	Acid-Test Ratio
2017:		/		=		to 1

  

ompute the days' sales uncollected.

(3)	Days' Sales Uncollected
	Choose Numerator:	/	Choose Denominator:	x	Days	=	Days Sales Uncollected
		/		x		=	Days sales uncollected
2017:		/		x		=		days

Compute the inventory turnover.

(4)	Inventory Turnover
	Choose Numerator:	/	Choose Denominator:	=	Inventory Turnover
		/		=	Inventory turnover
2017:		/		=		times

Answer 1