Please help with this problem Selected year-end financial statements of Cabot Co
ID: 2592185 • Letter: P
Question
Please help with this problem
Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2012, were inventory, $48,900; total assets, $189,400; common stock, $90,000; and retained earnings, $22,748.) Problem 13-4A Calculation of financial statement ratios P3 CABOT CORPORATION Income Statement For Year Ended December 31,2013 mhhe.com/wildFINMAN5e 297,250 151,350 98,600 4,100 48,650 19,598 $ 29,052 Cost of goods sold Gross profit Operating expenses . . . Income before taxes. . . . Income taxes Net income CABOT CORPORATION Balance Sheet December 31,2013 Assets Cash Short-term investments . ······.. Accounts receivable, net.. __ . . . Liabilities and Equity Accounts payable $ 10,000 $17,500 3,200 3,300 4,500 Long-term note payable, secured 32,150 63,400 90,000 62,800 . ...$240,200 Merchandise inventory 2,650 Common stock. 53,300 Retained earnings $240,200 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 tur Check Acid-test ratio, 2.2 to 1 over, (5) days' sales in inventory, (6) debt-to-equity ratio, (7) times interest earned, (8) profit margin ratio, Inventory turnover, 7.3 (9) total asset turnover, (10) return on total assets, and (11) return on common stockholders' equity. Round to one decimal place, except for part 6 round to two decimals.Explanation / Answer
Answer: Can answer the first four parts only . Have answered first 6,please put the rest parts in separate question to get answered.
(1) Current ratio : current assets/ current liabilties
What comes under current assets : Cash and cash equivalents, accounts receivable, inventory, marketable securities, prepaid expenses
Current assets : 10000 + 8400 + 29200 + 4500 +32150 + 2650 = $86900
current liabilities : accounts payable + accrued wages payable + income taxes payable
Current liabiltites : 17500 + 3200 + 3300
Current liabillties : 24000
Current ratio : 86900/24000 = 3.62
Acid test ratio : Current assets amount becomes more stringent in this
Current assets = Cash accounts receivable + short term investments
CA = 10000 + 8400 + 29200 + 4500 = 52100
Acid test ratio = 52100 / 24000 = 2.17
Days sales uncollected : accounts receivable / net sales * 365
29200/448600 *365 = 23.75
Inventory turnover = cost of goods sold / average inventory
average inventory = (32150 + 48900) / 2 = 40525
Inventory turnover = 297250/40525 = 7.33
Days sales inventory = 365 / inventory turnover ratio = 49.76
Debt to equity = total debt/ total equity = 87400/ 152800 = 0.5719