value 2.90 points Selected year-end financial statements of Cabot Corporation fo
ID: 2520760 • Letter: V
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value 2.90 points Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit, selected balance sheet amounts at December 31, 2015, were inventory, $46,900, total assets, $179,400; common stock, $82,000, and retained eanings, $48,428) CABOT CORPORATION Income Statement For Year Ended December 31, 2016 Sales Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes Income taxes Net income $ 453,600 298,050 155,550 99,200 4,400 51,950 20,928 S 31,022 CABOT CORPORATION Balance Sheet December 31, 2016 Liabilities and Equity Assets Cash Short-term investments Accounts receivable, net Notes receivable (trade) Merchandise inventory Prepaid expenses Plant assets, net Total assets S 17,500 3,000 4,700 $ 16,000 Accounts payable 9,400 30,600 7,000 38,150 2,600 148 300 $252,050 Accrued wages payable Income taxes payable Long-term note payable, secured by mortgage on plant assets Common stock Retained earnings 65,400 82,000 79.450 $252,050 Total liabilities and equity 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.) Current Ratio Choose Numerator:I Choose Denominator: Current Ratio # | Current ratio to 1 2016:Explanation / Answer
Answer 1.
Current Assets = Cash + Short-term Investments + Accounts Receivable, net + Notes Receivable (trade) + Merchandise Inventory + Prepaid Expenses
Current Assets = $16,000 + $9,400 + $30,600 + $7,000 + $38,150 + $2,600
Current Assets = $103,750
Current Liabilities = Accounts Payable + Accrue Wages Payable + Income Taxes Payable
Current Liabilities = $17,500 + $3,000 + $4,700
Current Liabilities = $25,200
Current Ratio = Current Assets / Current Liabilities
Current Ratio = $103,750 / $25,200
Current Ratio = 4.1 to 1
Answer 2.
Quick Assets = Current Assets - Merchandise Inventory - Prepaid Expenses
Quick Assets = $103,750 - $38,150 - $2,600
Quick Assets = $63,000
Quick Ratio = Quick Assets / Current Liabilities
Quick Ratio = $63,000 / $25,200
Quick Ratio = 2.5 to 1
Answer 3.
Current Receivable = Accounts Receivable, net + Notes Receivable (trade)
Current Receivable = $30,600 + $7,000
Current Receivable = $37,600
Days Sales Uncollected = Current Receivables / Net Sales * 365
Days Sales Uncollected = $37,600 / $453,600 * 365
Days Sales Uncollected = 30.3 days
Answer 4.
Average Inventory = ($46,900 + $38,150) / 2
Average Inventory = $42,525
Inventory Turnover = Cost of Goods Sold / Average Inventory
Inventory Turnover = $298,050 / $42,525
Inventory Turnover = 7.0 times
Answer 5.
Days Sales in Inventory = Merchandise Inventory / Cost of Goods Sold * 365
Days Sales in Inventory = $38,150 / $298,050 * 365
Days Sales in Inventory = 46.7 days
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