Task: 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, $52,348.)
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CABOT CORPORATION
Income Statement
For Year Ended December 31, 2008
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Sales
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$
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455,600
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Cost of goods sold
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298,150
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Gross profit
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157,450
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Operating expenses
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98,500
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Interest expense
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4,100
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Income before taxes
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54,850
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Income taxes
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22,096
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Net income
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$
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32,754
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CABOT CORPORATION
Balance Sheet
December 31, 2008
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Assets
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Liabilities and Equity
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Cash
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$
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16,000
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Accounts payable
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$
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24,500
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Short-term investments
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8,200
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Accrued wages payable
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3,400
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Accounts receivable, net
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33,000
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Income taxes payable
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3,000
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Notes receivable (trade)*
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6,000
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Long-term note payable, secured by mortgage on plant assets
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66,400
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Merchandise inventory
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36,150
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Common stock
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125,000
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Prepaid expenses
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2,450
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Retained earnings
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26,800
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Plant assets, net
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147,300
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Total liabilities and equity
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$
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249,100
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Total assets
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$
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249,100
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These are short-term notes receivable arising from customer (trade) sales.