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Category > Business & Finance Posted 13 Jul 2017 My Price 7.00

Ratio analysis—comprehensive problem

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.

k. Review the results of these calculations, evaluate the profitability and liquidity of this company, and state your opinion about its suitability as an investment for a young, single professional with funds to invest in common stock.

 

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Status NEW Posted 13 Jul 2017 04:07 PM My Price 7.00

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