50.1K

Verified Solution

Link Copied!

Problem 13-4A Calculating financial statement ratios LO P3

Selected current year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31 of the prior year were inventory, $54,900; total assets, $239,400; common stock, $82,000; and retained earnings, $44,358.)

CABOT CORPORATION Income Statement For Current Year Ended December 31
Sales	$	449,600
Cost of goods sold		297,550
Gross profit		152,050
Operating expenses		98,800
Interest expense		4,700
Income before taxes		48,550
Income tax expense		19,558
Net income	$	28,992

CABOT CORPORATION Balance Sheet December 31
Assets				Liabilities and Equity
Cash	$	12,000		Accounts payable	$	16,500
Short-term investments		8,600		Accrued wages payable		4,000
Accounts receivable, net		33,000		Income taxes payable		4,400
Merchandise inventory		38,150		Long-term note payable, secured by mortgage on plant assets		65,400
Prepaid expenses		2,600		Common stock		82,000
Plant assets, net		151,300		Retained earnings		73,350
Total assets	$	245,650		Total liabilities and equity	$	245,650

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.)

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 Req6 Req 7 Reg 8 Req9 Req 10 Reg 11 Compute the current ratio and acid-test ratio. (1) Current Ratio Choose Numerator: Choose Denominator: = Current Ratio Current ratio 1 = 1 = to 1 (2) Acid-Test Ratio Choose Denominator: Choose Numerator: 1 1 Acid-Test Ratio = Acid-Test Ratio to 1 1 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 Req3 Req 4 Reg 5 Reg 6 Req 7 Req8 Req9 Reg 10 Req 11 Compute the days' sales uncollected. (3) Choose Numerator: Days' Sales Uncollected 1 Choose Denominator: Days 1 x = Days Sales Uncollected = Days sales uncollected days X Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Req 4 Reg 5 Reg 6 Req 7 Req8 Reg 9 Reg 10 Reg 11 Compute the inventory turnover. (4) Inventory Turnover Choose Denominator: Choose Numerator: 1 = Inventory Turnover = Inventory turnover times 1 = 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 Req3 Reg 4 Reg 5 Reg 6 Req 7 Req 8 Req 9 Req 10 Reg 11 Compute the days' sales in inventory. (5) Days' Sales in Inventory Choose Denominator: Choose Numerator: 1 Days = Days' Sales in Inventory Days' sales in inventory days 1 X 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 Req3 Req 4 Reg 5 Reg 6 Req 7 Req 8 Req9 Req 10 Reg 11 Compute the debt-to-equity ratio. (6) Debt-to-Equity Ratio Choose Denominator: Choose Numerator: 1 11 Debt-to-Equity Ratio Debt-to-equity ratio to 1 / 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 Req3 Req 4 Req 5 Reg 6 Req 7 Req 8 Reg 9 Reg 10 Reg 11 Compute the times interest earned. (7) Times Interest Earned Choose Numerator: 1 Choose Denominator: Times Interest Earned 1 Times interest earned / times 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 Req3 Req 4 Reg 5 Req6 Reg 7 Req 8 Req9 Req 10 Reg 11 Compute the profit margin ratio. (8) Choose Numerator: Profit Margin Ratio 1 Choose Denominator: 1 Profit margin ratio = Profit margin ratio / % 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 Req3 Req 4 Reg 5 Reg 6 Req 7 Reg 8 Req9 Req 10 Req 11 Compute the total asset turnover. (9) Total Asset Turnover Choose Numerator: 1 Choose Denominator: / - Total Asset Turnover Total asset turnover times 11 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 Req3 Reg 4 Reg 5 Req 6 Req 7 Req 8 Req9 Req 10 Req 11 Compute the return on total assets. (10) Return on Total Assets Choose Denominator: Choose Numerator: 1 Return on Total Assets = Return on total assets 1 % 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 Req5 Reg 6 Req 7 Req 8 Reg 9 Reg 10 Req 11 Compute the return on common stockholders' equity. (11) Return on Co non ockholders' Equity Choose Denominator Choose Numerator: 1 Return On Common Stockholders' Equity = Return on common stockholders' equity / 1 - %

Answer & Explanation Solved by verified expert

See Answer