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    Calculation of financial statement ratios

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    Calculation of financial statement ratios
    Selected year-end financial statements of Cabot Corporation follow. (Note: All sales are on credit; selected balance sheet amounts at December 31, 2007, were inventory, $49,900; total assets, $169,400; common stock, $110,000; and retained earnings, $52,348.)

    CABOT CORPORATION
    Income Statement
    For Year Ended December 31, 2008
    Sales $ 455,600
    Cost of goods sold 298,150
    Gross profit 157,450
    Operating expenses 98,500
    Interest expense 4,100
    Income before taxes 54,850
    Income taxes 22,096
    Net income $ 32,754
    ________________________________________

    CABOT CORPORATION
    Balance Sheet
    December 31, 2008
    Assets Liabilities and Equity
    Cash $ 16,000 Accounts payable $ 24,500
    Short-term investments 8,200 Accrued wages payable 3,400
    Accounts receivable, net 33,000 Income taxes payable 3,000
    Notes receivable (trade)* 6,000 Long-term note payable, secured by mortgage on plant assets 66,400
    Merchandise inventory 36,150 Common stock 125,000
    Prepaid expenses 2,450 Retained earnings 26,800
    Plant assets, net 147,300 Total liabilities and equity $ 249,100
    Total assets $ 249,100
    ________________________________________
    * These are short-term notes receivable arising from customer (trade) sales.

    Required:
    Compute the following (Do not round interim calculations. Round your answer to 1 decimal place. Omit the "%" sign, which is provided for you):

    1. Current ratio to

    2. Acid-test ratio to

    3. Days' sales uncollected days

    4. Inventory turnover times

    5. Days' sales in inventory days

    6. Debt-to-equity ratio to

    7. Times interest earned times

    8. Profit margin ratio %

    9. Total asset turnover times

    10. Return on total assets %

    11. Return on common stockholders' equity %

    ________________________________________

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    https://brainmass.com/business/financial-statements/calculation-financial-statement-ratios-260667

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    Current Ratio = = = 3.29
    Acid test or Quick ratio = (current assets - inventories) / current liabilities = (101,800 - 36,150) / 30,900 = 2.12
    Days' sales uncollected = 365 / Receivable Turnover
    Because we need to know the receivable turnover in ...

    Solution Summary

    This solution involves the calculations of financial statement ratios.

    $2.19