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)
	2020			2019			2018
Current assets	$	650		$	900		$	700
Other assets		2,750			2,050			1,750
Total assets	$	3,400		$	2,950		$	2,450
Current liabilities	$	500		$	800		$	700
Long-term liabilities		1,500			1,000			800
Stockholders' equity		1,400			1,150			950
Total liabilities and stockholders' equity	$	3,400		$	2,950		$	2,450

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	$	3,300		$	2,900
Operating income		380			300
Interest expense		80			70
Net income		300			230
Other data:
Average number of common shares outstanding		44			42
Total dividends paid	$	50		$	30

Required:

1. Calculate return on investment, based on net income and average total assets, for 2020 and 2019.
2. Calculate return on equity for 2020 and 2019.
3. Calculate working capital and the current ratio for each of the past three years.
4. Calculate earnings per share for 2020 and 2019.
5. If Wiper's stock had a price/earnings ratio of 14 at the end of 2020, what was the market price of the stock?
6. Calculate the cash dividend per share for 2020 and the dividend yield based on the market price calculated in part e.
7. Calculate the dividend payout ratio for 2020.
8. Assume that accounts receivable at December 31, 2020, totaled $310 million. Calculate the number of days' sales in receivables at that date.
9. Calculate Wiper's debt ratio and debt/equity ratio at December 31, 2020 and 2019.
10. Calculate the times interest earned ratio for 2020 and 2019.

ROI 2020: %

ROI 2019: %

ROE 2020: %

ROE 2019: %

Working Capital 2020:                                         2019:                                        2018:               

Current Ratio 2020:                                            2019:                                         2018:

Earnings Per Share 2020:                                  2019:

Answer 1

	2020	2019	2018
Return on investment (ROI) = Net income / average total assets Average total assets = Beginning+Ending/ 2	300/3,175*100 = 9.45% (3,400+2,950)/2 = 3,175	230/2,700*100 = 8.52% (2,450+2,950)/2 = 2,700
Return on equity (ROE) = Net income/ average stockholders equity Average stockholders equity = Beginning+Ending / 2	300/1,275*100 = 23.53% (1,150+1,400)/2 = 1,275	230/1,050*100 = 21.9% (950+1,150)/2 = 1,050
Working capital = Current assets-current liabilities	650-500 = 150	900-800 = 100	700-700 = 0
Current ratio = current assets/current liabilities	650/500= 1.3	900/800=1.125	700/700=1
Earning per share = Net income/average number of common shares outstanding	300/44 = $6.82	230/42 = $5.48