FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Balance of Payments
BOP is categorized into the following three components:

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c, d, and e

a. Calculate return on investment, based on net income and average total assets, for 2014 and 2013. Show both margin and turnover in your calculation. b. Calculate return on equity for 2014 and 2013. c. Calculate working capital and the current ratio for each of the past three years. d. Calculate earnings per share for 2014 and 2013. e. If Wiper’s stock had a price/earnings ratio of 13 at the end of 2014, what was the market price of the stock? f. Calculate the cash dividend per share for 2014 and the dividend yield based on the market price calculated in part e. g. Calculate the dividend payout ratio for 2014. h. Assume that accounts receivable at December 31, 2014, 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, 2014 and 2013. j. Calculate the times interest earned ratio for 2014 and 2013. 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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Transcribed Image Text:a. Calculate return on investment, based on net income and average total assets, for 2014 and 2013. Show both margin and turnover in your calculation. b. Calculate return on equity for 2014 and 2013. c. Calculate working capital and the current ratio for each of the past three years. d. Calculate earnings per share for 2014 and 2013. e. If Wiper’s stock had a price/earnings ratio of 13 at the end of 2014, what was the market price of the stock? f. Calculate the cash dividend per share for 2014 and the dividend yield based on the market price calculated in part e. g. Calculate the dividend payout ratio for 2014. h. Assume that accounts receivable at December 31, 2014, 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, 2014 and 2013. j. Calculate the times interest earned ratio for 2014 and 2013. 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.
**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, 2014, 2013, 2012 (in millions) - **2014** - Current assets: $677 - Other assets: $2,413 - Total assets: $3,090 - Current liabilities: $562 - Long-term liabilities: $1,521 - Stockholders' equity: $1,007 - **2013** - Current assets: $891 - Other assets: $1,920 - Total assets: $2,811 - Current liabilities: $803 - Long-term liabilities: $982 - Stockholders' equity: $1,026 - **2012** - Current assets: $736 - Other assets: $1,719 - Total assets: $2,455 - Current liabilities: $710 - Long-term liabilities: $827 - Stockholders' equity: $918 --- **WIPER, INC.** **Selected Income Statement and Other Data** For the Years Ended December 31, 2014 and 2013 (in millions) - **2014** - Sales: $3,050 - Operating income: $296 - Interest expense: $84 - Net income: $192 - Average number of common shares outstanding: 41.3 - Total dividends paid: $50.0 - **2013** - Sales: $2,913 - Operating income: $310 - Interest expense: $65 - Net income: $187 - Average number of common shares outstanding: 46.7 - Total dividends paid: $52.3 --- This data provides an overview of Wiper, Inc.'s financial situation, showing asset distribution, liabilities, stockholders' equity, and key income statement figures for three consecutive years.
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Transcribed Image Text:**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, 2014, 2013, 2012 (in millions) - **2014** - Current assets: $677 - Other assets: $2,413 - Total assets: $3,090 - Current liabilities: $562 - Long-term liabilities: $1,521 - Stockholders' equity: $1,007 - **2013** - Current assets: $891 - Other assets: $1,920 - Total assets: $2,811 - Current liabilities: $803 - Long-term liabilities: $982 - Stockholders' equity: $1,026 - **2012** - Current assets: $736 - Other assets: $1,719 - Total assets: $2,455 - Current liabilities: $710 - Long-term liabilities: $827 - Stockholders' equity: $918 --- **WIPER, INC.** **Selected Income Statement and Other Data** For the Years Ended December 31, 2014 and 2013 (in millions) - **2014** - Sales: $3,050 - Operating income: $296 - Interest expense: $84 - Net income: $192 - Average number of common shares outstanding: 41.3 - Total dividends paid: $50.0 - **2013** - Sales: $2,913 - Operating income: $310 - Interest expense: $65 - Net income: $187 - Average number of common shares outstanding: 46.7 - Total dividends paid: $52.3 --- This data provides an overview of Wiper, Inc.'s financial situation, showing asset distribution, liabilities, stockholders' equity, and key income statement figures for three consecutive years.
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