Question

Presented here are summarized data from the balance sheets and income statements of Wiper Inc.: WIPER INC. Condensed Balance Sheets December 31, 2020, 2019, 2018 (in millions) 2018 $ 853 Current assets Other assets Total assets Current liabilities Long-term liabilities Stockholders' equity Total liabilities and stockholders' equity 2020 2019 $ 771 $ 991 2,425 1,932 $3,196 $2,923 $ 589 5842 1,588 1,043 1,019 1,038 $3,196 $2,923 $2,584 $ 735 919 930 $2,584 WIPER INC. Selected Income Statement and Other Data For the year Ended December 31, 2020 and 2019 (in millions) 2020 2019 Income statement data: Sales Operating income Interest expense Net income Other data: Average number of common shares outstanding Total dividends paid $3,062 308 96 227 $2,925 322 77 222 42.5 $ 62.0 47.9 $ 53.5 Required: a. Calculate return on investment, based on net income and average total assets, for 2020 and 2019. b. Calculate return on equity for 2020 and 2019. c. Calculate working capital and the current ratio for each of the past three years. d. Calculate earnings per share for 2020 and 2019. e. If Wiper's stock had a price/earnings ratio of 13 at the end of 2020, what was the market price of the stock? f. Calculate the cash dividend per share for 2020 and the dividend yield based on the market price calculated in parte. g. Calculate the dividend payout ratio for 2020. h. Assume that accounts receivable at December 31, 2020, totaled $321 million. Calculate the number of days' sales in receivables at that date. i. Calculate Wiper's debt ratio and debt/equity ratio at December 31, 2020 and 2019. j. Calculate the times interest earned ratio for 2020 and 2019.

Answer 1

[ $227 Xoof -Р ХО) a) calculation of return on anvestment L eono 2019 Don 17.821.1.8.06.f. $222 T $2901 E $2753.5 working notes ROP = Netancone x 100 on o Average total assets for 2020 Average total assets = $31964&2923 $2584 E $290111 for 2019 Average total assets = $. 2923 + $7584 3 = $27535

6) calculation of return on equity T2020 2019 - Return on equity 22.28% 21.39% $ 222 $ 1038 x100 ($227 Ex100 $ 1019 working Notes - ROC - Netancone x 100 - Equity c) caloulation of working capital & corrent ratios I 2020 2019 2018 1 working capitces -$182 $ lug $18 L ($941-$58) $221-$842)$853-$735) cuvent ratio 1.31 1.77 1.161 8 $771) Bags ($853) $ 589 $8424 735) working capital = current assets - current - Cabilities Current ratio & surrent assets x 100 current liabilities

of calculation of earning per shave. 2020 2019 Caming per share $5.34 $4.63 $227) C$222) (42 15 taz.a EPS = Net Gncome a Number of shares outstanding e market price of the stock P.E ratio 13oint tortor MPS 13 - MPS =13 EPSB 2.0 $5- 34 os. mps = $5.348 13 = $69.42 & cash dividend (share = dividend No. of shares E $ 62 .. ) 42'5 I $1.45 dividend yield = DPS i flu5 x 100 E 2.08):

ratio DPS X 100 9) Squidend payou EPS S $1.45 X 100 $ 534 27:15-- E h) Number of days sales as receivables. - $32) x 365 $3062 - = 38 days & Debt ratio = Total deft, x 100 total assots. for 2020 = $5894 $1588 x 100 $3196 = 68.11 / for 2010 = $1885 X100 $2923 = 64.4sl.

2020 Debt- € quity ratio Debt- equity ratio 2.136 ($2177) $1019) 201q 1.815 $1885-1 $1038 I times Interest earned ratio i farhings before anterest & tan Interest expenses 2020 2019 3.36 13.88 ames Anterest earned ratio $927 thabh $222+777 $77