Ratio analysis—comprehensive problem Presented here are summarized data from the balance sheets and income statements of Wiper, Inc.:
WIPER, INC. Condensed Balance Sheets December 31, 2011, 2010, 2009 (in millions) | |||
| 2011 | 2010 | 2009 |
Current assets | $ 677 | $ 891 | $ 736 |
Other assets | 2,413 | 1,920 | 1,719 |
| $3,090 | $2,811 | $2,455 |
Current liabilities | $ 562 | $ 803 | $ 710 |
Long-term liabilities . . . | 1,521 | 982 | 827 |
Owners’ equity | 1,007 | 1,026 | 918 |
| $3,090 | $2,811 | $2,455 |
WIPER, INC. | ||
Selected Income Statement and Other Data For the Years Ended December 31, 2011 and 2010 (in millions) | ||
| 2011 | 2010 |
Income statement data: |
|
|
Sales | $3,050 | $2,913 |
Operating income | 296 | 310 |
Interest expense | 84 | 65 |
Net income | 192 | 187 |
Other data: |
|
|
Average number of common shares outstanding | 41.3 | 46.7 |
Total dividends paid | $ 50.0 | $ 52.3 |
Required:
a.Calculate return on investment, based on net income and average total assets, for 2011 and 2010. Show both margin and turnover in your calculation.
b. Calculate return on equity for 2011 and 2010.
c. Calculate working capital and the current ratio for each of the past three years.
d. Calculate earnings per share for 2011 and 2010.
e. If Wiper’s stock had a price/earnings ratio of 13 at the end of 2011, what was the market price of the stock?
f. Calculate the cash dividend per share for 2011 and the dividend yield based on the market price calculated in part e.
g. Calculate the dividend payout ratio for 2011.
h. Assume that accounts receivable at December 31, 2011, totaled $309 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, 2011 and 2010.
j. Calculate the times interest earned factor for 2011 and 2010.
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