Question

If Wiper's stock had a price/earnings ratio of 10 at the end of 2020, what was the market price of the stock?Calculate the cash dividend per share for 2020 and the dividend yield based on the market price calculated in part e.Calculate the dividend payout ratio for 2020.Assume that accounts receivable at December 31, 2020, totaled $322 million. Calculate the number of days' sales in receivables at that date.Calculate Wiper's debt ratio and debt/equity ratio at December 31, 2020 and 2019.Calculate the times interest earned ratio for 2020 and 2019.

Answer 1

Stock Price is $54.50

Cash Dividend per share $1.50

Dividend Yield 2.75%

Dividend payout ratio 27.46%

Days Sales in Receivable 38 days

Debt Ratio 68.29%

Debt/equity ratio 1.57

Interest earned ratio 3.16 times

Step-by-step explanation:

1. Market price = Price to earning ratio * Earning per share

Earnings per share = Net Income / Average number of shares outstanding

Earnings per share : 233 / 42.7 = 5.45

Market price per share : 10 * 5.45 = 54.50

2. Dividend per share : Dividend paid / number of shares outstanding

DPS : 64 / 42.7 = 1.50

3. Dividend Yield : Dividend per share / Stock Price share

Dividend Yield : 1.50 / 54.50

4. Dividend Payout ratio : Total Dividend paid / Net Income

Dividend Payout ratio : 64 / 233 = 27.46%

5. Day Receivale : (Average Receivable / Sales ) * 365

Days Receivables : 322/ 3064 * 365 = 38 days

6. Debt Ratio : Total Liabilities / Total Assets

Debt ratio : 2194 / 3215 = 68.29%

7. Debt/ equity ratio : Debt / Equity

Debt/Equity : 1603 / 1021 = 1.57

8. Interest Earned Ratio : Earning before Interest and Tax / Interest Expense

Interest Earned Ratio : 310 / 98 = 3.16 times