Selected year-end financial statements of Cabot Corporation follow. (All sales w

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, $46,900; total assets, $219,400; common stock, $87,000; and retained earnings, $41,551.) CABOT CORPORATION Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes Income taxes Net income $ 456,600 297,050 159,550 98,600 4,100 56,850 22,901 $ 33,949

Explanation / Answer

Current Ratio Choose Numerator: / Choose Denominator: = Current Ratio Current assets / Current liabilities = Current Ratio 2017 101500 / 24900 = 4.1 to 1 2 Acid-Test Ratio Choose Numerator: / Choose Denominator: = Acid-Test Ratio Quick assets / Current liabilities = Acid-Test Ratio 2017 68700 / 24900 = 2.8 to 1 3 Days Sales Uncollected Choose Numerator: / Choose Denominator: x Days = Days Sales Uncollected Current receivables / Net sales x 365 = Days Sales Uncollected 2017 41700 / 456600 x 365 = 33.3 days

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