Financial Statement Ratio Calculations
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Calculation of financial statement ratios
please explain how percentages/raios are arrived at.
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, $48,900; total assets, $219,400; common stock, $95,000; and retained earnings, $52,748.)
CABOT CORPORATIONIncome StatementFor Year Ended December 31, 2008
Sales $ 449,600
Cost of goods sold 297,150
Gross profit 152,450
Operating expenses 99,300
Interest expense 4,000
Income before taxes 49,150
Income taxes 19,800
Net income $ 29,350
CABOT CORPORATIONBalance SheetDecember 31, 2008
Assets Liabilities and Equity
Cash $ 22,000 Accounts payable $ 21,500
Short-term investments 9,600 Accrued wages payable 3,800
Accounts receivable, net 32,400 Income taxes payable 2,800
Notes receivable (trade)* 3,500 Long-term note payable, secured by mortgage on plant assets 66,400
Merchandise inventory 30,150 Common stock 120,000
Prepaid expenses 2,600 Retained earnings 35,050
Plant assets, net 149,300 Total liabilities and equity $ 249,550
Total assets $ 249,550
* 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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Solution Summary
The solution explains the calculation of various ratios for Cabot Corporation
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