WIPER INC. Condensed Balance Sheets December 31, 2020, 2019, 2018 (in millions) 2020 2019 $ 900 2,050 2018 $ 700 1,750 $2,450 Current assets other assets $ 650 2,750 Total assets $3,400 $2,950 Current liabilities Long-term liabilities stockholders' equity $ 500 1,500 1,400 $3,400 $ 800 1,000 1,150 $2,950 $ 700 800 950 Total liabilities and stockholders' equity $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 Interest expense Net income other data: 380 300 80 70 300 230 Average number of common shares outstanding Total dividends paid 44 42 50 24 30 Requlred: a. Calculate return on Investment, based on net Income and average total assets, for 2020 and 2019. b. Calculate return on equlty for 2020 and 2019. c. Calculate working capital and the current ratlo 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 ratlo of 14 at the end of 2020, what was the market price of the stock? f. Calculate the cash divldend per share for 2020 and the dividend yleld based on the market price calculated In part e. g. Calculate the dividend payout ratio for 2020. h. Assume that accounts recelvable at December 31, 2020, totaled $310 million. Calculate the number of days' sales In recelvables 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.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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