Given the following financial statements, historical ratios, and industry averages, calculate the UG Company€™s financial ratios for 2012. Analyze its overall financial situation both in comparison to industry averages and over the period 2010€“2012. Break your analysis into an evaluation of the firm€™s liquidity, activity, debt, profitability, and market value.

aOn December 31, 2009, the firm€™s common stock closed at $27.50.

a Based on a 365-day year and on end-of-year figures.

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UG Company Income Statement For the Year Ended December 31, 2012 Sales revenue Less: Cost of goods solda Gross profit Less operating expenses $10,000,000 7.500,000 S 2,500,000 300,000 650,000 50,000 200,000 Selling expense General and administrative expense Lease expense Depreciation expense Total operating expense Operating profit (EBITI) Less: Interest expense Net profits before taxes Less: Taxes (rate = 40%) Net profits after taxes Less: Preferred stock dividends Eamings available for common stockholders Eamings per share (EPS) 1.200,000 $1,300,000 200,000 $1,100,000 440,000 S 660,000 50,000 S 610.000 $3.05 Annual credit purchases of $6.2 million were made during the year UG Company Balance Sheet As of December 31, 2012 Assets Liabilities and Stockholders' Equitv Current assets Current liabilities Cash S 200,000 Accounts payable S 900,000 50,000 Notes payable 800,000 Accruals 950,000 Total current liabilities 200,000 100,000 S 1.200,000 Marketable secunties Accounts receivable Inventories Total current assets 2.000.000 Long-term debt including financial leases) $12,000,000 Stockholders equity S 3,000,000 Gross fixed assets Less: Accumulated depreci ion Net fixed assets 3.000,000 Preferred stock (25.000 shares, $2 1.000,000 S9,000,000 dividend) Common stock (200,000 shrs, $3 par 600,000 5,200,000 1000,000 S 7.800.000 Total liabilities and stockholders' equity $12.000,000 Other assets Total assets $ 1.000.000 Paid-in capital in excess ofpar $12.000.000 Retained eamings Total stockholders equity UG Company Historical and Industry Average Ratios Industry Average 2012 1.85 1.05 8.60 Industry Ratio Currentratio Quick (acid-test) ratio Inventory tumover Average collection periodt Average payment period* Fixed asset tumover Total asset tumover Debtratio Debt-to-equity ratio Times interest eamedratio Gross profit margin Operatingprofit margin Net profit margin Retum ontotal assets (ROA) Retum on common equity (ROE) Eamings per share (EPS) Price/eamings (P E) ratio Market/book (M B)ratio Actual 2010 Actual 2011 1.55 0.92 9.21 36.4 days 58.5 days 60.8 days 1.05 0.80 0.20 0.27 7.3 0.27 0.12 0.067 0.054 0.073 $2.20 10.5 1.05 1.4 1.00 9.52 45.0 days 1.08 0.74 0.20 0.25 8.2 0.30 0.12 0.067 0.049 0.066 $1.75 12 1.20 35.0 days 45.8 days 1.07 0.74 0.30 0.39 8.0 0.25 0.10 0.058 0.043 0.072 $1.50 11.2 1.10