The condensed comparative income statements and balance sheets of UK Corporation are presented on the next page. All figures are given in thousands of dollars, except earnings per share and market price per share. Additional data for UK Corporation in 2011 and 2010 are as follows:

Balances of selected accounts at the end of 2009 were accounts receivable (net), $15,000; inventory, $50,000; accounts payable, $24,000; total assets, $250,000; and stockholders’ equity, $200,000. All of the bonds payable were long-term liabilities.

Required

Perform a comprehensive ratio analysis. Round percentages and ratios to one decimal place.

1. Prepare a liquidity analysis by calculating for each year the (a) current ratio, (b) quick ratio, (c) receivable turnover, (d) days’ sales uncollected, (e) inventory turnover, (f) days’ inventory on hand, (g) payables turnover, and (h) days’ payable.

2. Prepare a profitability analysis by calculating for each year the (a) profit margin, (b) asset turnover, (c) return on assets, and (d) return on equity.

3. Prepare a long-term solvency analysis by calculating for each year the (a) debt to equity ratio and (b) interest coverage ratio.

4. Prepare a cash flow adequacy analysis by calculating for each year the (a) cash flow yield, (b) cash flows to sales, (c) cash flows to assets, and (d) free cash flow.

5. Prepare an analysis of market strength by calculating for each year the (a) price/earnings (P/E) ratio and (b) dividends yield.

6. After making the calculations, indicate whether each ratio improved or deteriorated from 2010 to 2011 (use F for favorable and U for unfavorable and consider changes of 0.1 or less to be neutral).

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2011 2010 Net cash flows from operating activitics $100,000 $80,000 $30,000 20,000 $70 $80,000 $50,000 $25,000 capital expenditures Dividends paid Number of common shares Market price per share 20,000 $50 UK Corporation Comparative Income Statements For the Years Ended December 31, 2011 and 2010 2011 2010 Net sales $360,000 200,000 $160,000 $400,000 Cost of goods sold Gross margin Operating expenses Selling expenses Administrative expenses Total operating expenses Income from operations Interest expense Income before income taxes 200,000 $200,000 $ 50,000 60,000 $110,000 $ 90,000 15,000 $ 75,000 $ 40,000 70,000 $110,000 $ 50,000 10,000 $ 40,000 Income taxes expense 10,000 6,000 $ 65,000 3.25 $ 34,000 Net income Earnings per share $. 1.70 UK Corporation Comparative Balance Sheets December 31, 2011 and 2010 2011 2010 Assets $ 25,000 $ 20,000 18,000 52,000 200,000 $290,000 Cash Accounts receivable (net) Inventory Property, plant, and equipment (net) Total assets 21,000 49,000 205,000 $300,000 Liabilities and Stockholders' Equity $ 50,000 10,000 10,000 $ 30,000 Accounts payable Notes payable Bonds payable Common stock, $10 par value Retained earnings Total liabilities and stockholders' equity $300,000 40,000 200,000 200,000 30,000 20,000 $290,000